"I mean, when you look at the activities of Hezbollah, nobody should have sympathy for the way in which they conduct themselves," Mr Dutton told 2GB radio on Thursday.
"But we need to make decisions based on all of the facts and unfortunately sometimes in these cases, all of the facts aren't publicly available," he said.
"We've got to make a decision speaking to the agencies and working out what sometimes is a line-ball call, but there are other equities that we need to look at in the consideration of many of these matters."
Mr Dutton said he relied heavily on advice from intelligence agencies ASIS and ASIO, as well as Defence and other government agencies.
The minister indicated there were often a variety of factors at play, including intelligence sharing arrangements and counter-terror cooperation.
The issue has cropped up again after a prosecutor's bid to have a Sydney man declared a "high-risk terrorist offender" failed because the Australian government has not declared Hezbollah a terror group.
Dr Raihan Ismail, a senior lecturer at the Australian National University, called Hezbollah "one of the most complex groups" in the Middle East.
"It's a political party, it has a military that is stronger than the Lebanese army ... it plays an important role in Lebanese society, it offers social services to many Lebanese including building hospitals," she told SBS News.
Dr Ismail said while groups like Al-Qaeda and IS were clearly terror groups, it is less obvious with Hezbollah.
"With Hezbollah, because of its participation in the political system in Lebanon, the fact that it forms part of the Lebanese government, it's very difficult to brand the whole group as a terror organisation."
Different countries have deemed different parts of Hezbollah a terror group.
The United States, United Kingdom, Israel, Germany and Canada list the entire organisation as a terror group, while France, New Zealand and the European Union only list its military wing as a terror group.
Hezbollah's External Security Organisation (ESO), which sits under the military wing, has been listed as a terrorist organisation in Australia since 2003.
In its listing, the government said "the broader goals of Hezbollah are the 'liberation' of Jerusalem, the destruction of Israel, and the establishment of a Shia-led Islamic state in Lebanon".
"The ESO sits under the military wing of Hezbollah: alongside, but distinct from Hezbollah's formal militia and military activity," the listing said.
"The ESO has an ongoing program of contingency planning for terrorist activities around the world."
Several Jewish lobby groups in Australia have been pressuring the Morrison government to list the whole entity as a terror group.
Hezbollah was established as a Shiite militant movement in 1982 with Iranian assistance during the Israeli occupation of southern Lebanon.
Its capture of two Israeli soldiers in 2006 sparked a 34-day war in which 1,200 people were killed.
The group is seen as a key component of Shiite-majority Iran's strategy for regional influence.
Additional reporting: AFP, AAP