Matthaus was speaking to reporters in Qatar's capital Doha about Algeria's chances in the 2010 World Cup finals in South Africa but looked grim when asked about the alleged conspiracy.
"You were not born yet in 1982," Matthaus, who was named the World Player of the Year in 1991 but could not forge a successful coaching career after his retirement, told an Algerian reporter.
"The Algerians still believe that Germany and Austria conspired against them but this is totally untrue. Germany never act like that."
Algeria, who were making their World Cup debut in 1982, caused a huge upset by opening their campaign with a 2-1 victory over reigning European champions West Germany.
A victory for West Germany over Austria by a one or two-goal margins in their final group game was enough to give both of them a place in the knockout phase at the expense of Algeria.
West Germany scored an early goal through Horst Hrubesch for a 1-0 lead and then both sides kicked the ball around aimlessly until the final whistle.
"Every team was just looking to win, regardless of any other factors," Matthaus added.
"I never received any instructions to fix the game, this has never happened," the former Bayern Munich star, who was part of West Germany's squad for the 1982 World Cup, added.
Algeria will play in Group C of the World Cup along with England, the United States and Slovenia.