The office of Prime Minister Benjamin Netanyahu said in a statement that the report was "mendacious and without any foundation whatsoever".
Since early January, Israel has been in the grip of the largest protests since the country’s founding, with millions taking to the streets to denounce Mr Netanyahu’s plan to overhaul the country’s judiciary.
His proposed reforms, which were put on hold late last month, would give the government significant influence over Supreme Court positions.
They would also allow parliament to overturn Supreme Court decisions by a simple majority vote among its 121 members.
Defence Minister Yoav Gallant strongly condemn the plans, leading Mr Netanyahu to remove him from the post, although he remains amid a growing security crisis on the country’s borders and in the Israeli-occupied West Bank.
Significant numbers of serving personnel in the country’s security forces have withheld their service over the proposed reforms, joining workers from across the country who have begun industrial action.
The New York Times on Saturday published an assessment it attributed to a central intelligence update from March 1 that Mossad leadership had encouraged its staff and Israeli citizens to join the mass protests.
The paper said that while the leaked documents seemed authentic, it did not mean they were accurate.
"The Mossad and its senior officials did not — and do not — encourage agency personnel to join the demonstrations against the government, political demonstrations or any political activity," Mr Netanyahu’s office said.
After weeks of intensifying protests, Mr Netanyahu in late March relented and said he would delay the contested reforms to allow for compromise talks with opposition parties.
The US Justice Department said on Friday it was in touch with the Defence Department and had begun an investigation into the leak of the documents, covering subjects relating to national security.
It declined to make further comment.