Mark Weiss, the owner and director of the Weiss Gallery in London, told AFP it was a "complete shock" to hear that the French culture ministry claimed "The Carrying of the Cross", painted by Nicolas Tournier around 1632.
He said the first he had heard of the claim was from a press release issued by the ministry on Monday, which said the work was stolen from a Toulouse museum 200 years ago.
It added that the ministry had barred the gallery from taking it back to Britain.
"The statement issued is a complete shock to me," Weiss said, adding that the subsequent public furore had been "extremely distressing".
"The painting as far as I'm aware is not stolen. The painting was listed as missing from an inventory in 1818, but the French authorities have been aware of this painting for two years.
"I've been in communication with the director of the Toulouse museum since I acquired the painting in 2010, and at no stage has he ever stated that the picture was a stolen painting."
Weiss added that the international Art Loss Register "has no record of this ever being lodged as a stolen painting -- indeed they are quite concerned about this issue."
The art dealer was hoping to finalise the sale of the painting to the Augustins Museum in Toulouse at an art fair in Paris, offering it for 550,000 euros ($760,000) -- below the current 675,000 euro market price.
"We've been in legitimate negotiations for him (the museum director) to try and acquire the painting," Weiss said.
Weiss paid just under 400,000 euros for the painting in 2010, but at that time there were doubts about whether it was really by Tournier. Since then, the director of the Augustins Museum has authenticated it, Weiss said.
On Monday, the French culture ministry claimed the painting had been stolen from the Toulouse museum in 1818 and still belonged to the French state.
"We are claiming this painting as a property of the state and it will not leave the country," the ministry said, adding that it had informed the gallery of its decision at the weekend.
Weiss disputed the ministry's claim, and also said he had never intended to take the painting home but to hand it over to the Toulouse museum.