The 80-year-old actor was quoted in an interview with German Sunday newspaper Bild am Sonntag as saying: “One must have serious concerns for [Sir Sean].”
Caine, whose films have included Alfie and The Italian Job, said the 007 actor was becoming increasingly confused, often not knowing where he was, and suffering from memory loss.
Bild said Sir Sean’s memory loss was “noticeable” and that only a few close friends and confidantes, like Caine, had access to the 83-year-old actor.
The newspaper also said the Scottish actor’s wife Micheline Roquebrune, 77, was frightened to pick up the phone when he was out on the streets of Manhattan, suggesting he can sometimes not find his way home.
The story in Europe’s biggest- selling Sunday newspaper appeared under the headline “Connery forgets his life”.
But Caine told The Daily Record : “I did some interviews over in Germany fir a new film I have done and can only assume that someone has twisted my words or got the wrong end of the stick.
“I haven’t seen Sean for a couple of years but my wife and I spoke to him on the phone on his birthday this week and he was very well.”
Speaking about comments that the James Bond actor had ‘lost control of his senses’, Sir Michael insisted: “I have no idea where they are getting this stuff from.”
Although Sir Sean had been suffering from ill-health last year, Sir Michael added: “He is much better now and it was never anything to do with his mental state.
Sir Sean Connery’s publicist has also denied that the Scots actor is suffering from Alzheimer’s disease after the claims published in Bild am Sonntag.
Los Angeles-based Nancy Seltzer, suggested last night that Caine may have been misquoted.
Ms Seltzer, who described the story as “ridiculous”, added: “This is truly silly and nonsense.”
In 2011, Ms Seltzer confirmed that Edinburgh-born Sir Sean had officially retired from public appearances but said he was in good health “mentally and physically”.
The following year, Sir Sean supported the 600th anniversary campaign of the University of St Andrews, narrating the documentary feature, Ever to Excel, about the academic institution from which he received an honorary degree in 1988.
Last year, Sir Sean, along with the university’s principal, opened the Stock Exchange in New York.
In February this year, he supported a campaign to save the Byre Theatre in St Andrews after the company behind it went into liquidation.
Sir Sean and Caine have been friends since they first met at a “bottle party” in London in the late 1950s.
“If someone was giving a party in those days and couldn’t quite afford it, the invitation would be to bring a bottle and a bird,” said Caine in an earlier interview.
“I was so broke that I couldn’t afford to bring a bottle, so I brought two birds. And they were both very beautiful girls. I walked into this party and there was Sean, who seemed enormous compared with the rest of us weedy actor types, and he saw me with those two girls and I became his instant new best friend.”
Recalling a night out in London, Caine added: “I was 23 and Sean was 26 and he had just got into the chorus of South Pacific. At that time he was built like Arnie Schwarzenegger. “We were in a club and some girls were on stage trying to sing. Some guys behind us were giving them a hard time, so Sean just got up and beat all four of them up. I just held his coat.”
The friendship between the two actors deepened after they appeared in The Man Who Would be King in 1975.
Sir Sean last appeared before the cameras in 2003 in The League of Extraordinary Gentlemen.
In 2010, Caine, explaining why his friend would never return to the big screen, said: “The movie business retired him [Sir Sean] because he didn’t want to play small parts about old men and they weren’t offering him any young parts in romantic leads.”
This is not the first time the actor’s health has come under the spotlight. In 1993, Sir Sean took pre-emptive action by appearing on the Late Show with David Letterman after Japanese and South African news agencies reported that he had died from throat cancer following years of heavy smoking.
Two years later, he said he had received radiation treatment to remove nodules from his vocal cords.