The close friend of Pte Kovco, codenamed Soldier 14, told the inquiry into the Victorian soldier's death he never touched the gun, despite traces of his DNA being found on the weapon.
Under intense cross examination by Lieutenant Colonel Frank Holles, the lawyer representing Pte Kovco's parents, Soldier 14 was asked if he shot his friend inside their Baghdad barracks on April 21.
The inquiry has previously heard that Soldier 14 had been on duty with Pte Kovco at the Australian Embassy compound in Baghdad just hours before the shooting.
When they finished duty about 3pm they returned to their adjoining rooms in the compound's accommodation barracks.
Soldier 14 has previously told the inquiry he was in his own room when he heard Pte Kovco's pistol fire around 4pm.
Lt Col Holles today suggested to Soldier 14 that the way his DNA ended up on Pte Kovco's gun was because he went into Pte Kovco's room and held the pistol to his friend's head and fired the fatal shot.
"No sir," Soldier 14 replied.
Lt Col Holles then asked: "Soldier 14 you were in that room weren't you?"
Soldier 14 replied: "No sir."
Lt Col Holles: "It was you who discharged the weapon that day wasn't it?"
Soldier 14 again rejected the claim: "No sir."
Soldier 14's counsel objected several times during Lt Col Holles' cross examination, saying his claims were based on hypothetical situations and would cause sensational reporting of the issue.
But the inquiry's president said he would allow the questions.
The inquiry has previously been told Pte Kovco was shot while his two roommates were in the barracks room they all shared.
However, both roommates, codenamed soldiers 17 and 19, have told the inquiry they did not see how Pte Kovco was shot.
Soldier 14 today told the inquiry that he had discussed the shooting with soldiers 17 and 19 before giving evidence to the inquiry.
"We have had discussions on a numerous occasions trying to work out what happened," Soldier 14 said.
Lying denied
Soldier 14 also denied lying to the inquiry and making up evidence.
Counsel assisting the inquiry, Lieutenant-Colonel Michael Griffin, accused Soldier 14 of having "invented" evidence about sharing a megaphone with Pte Kovco to explain how his DNA ended up on the pistol.
But Soldier 14 rejected the claim, insisting they had shared a megaphone several times on the day Pte Kovco died.
Lt Col Holles also accused him of making up claims that he had berated Pte Kovco for inappropriately loading, or "silent cocking", his pistol a few days before the fatal shooting.
Soldier 14 replied: "No sir".
Earlier, counsel representing Pte Kovco's interests, Colonel Les Young, put a theoretical question to Soldier 14, asking that if Pte Kovco was still alive, would he still be able to explain the DNA found on his pistol.
Soldier 14 replied: "Obviously (I wish) that he was still here and secondly so maybe he could explain really exactly what happened sir."
The inquiry continues.