"The council of ministers denies these false accusations that are not based on evidence," the cabinet said in a statement following its weekly meeting chaired by Prime Minister Sheikh Nasser Mohammad al-Ahmad al-Sabah.
"The state of Kuwait rejects any action that undermines or casts doubt on its charity organisations and its positive role in serving the Kuwaiti, Islamic and human society," the statement said.
The US Treasury Department froze the assets of the Revival of Islamic Heritage Society's Kuwait headquarters, and specifically any assets the group holds under US jurisdiction, citing its alleged support for Al-Qaeda and terrorism.
It also barred US nationals from any transactions with the group.
"RIHS has used charity and humanitarian assistance as cover to fund terrorist activity and harm innocent civilians, often in poor and impoverished regions," said Stuart Levey, under secretary for terrorism and financial intelligence.
The US government applied similar measures to the organisation's offices in Afghanistan and Pakistan in 2002 "based on evidence of their support for Al-Qaeda," the Treasury statement said.
The society categorically denied the allegations on Saturday saying its accounts were being monitored by authorities in Kuwait.
The Kuwaiti cabinet also reiterated its trust and confidence in RIHS and other Kuwaiti charity groups, praising their efforts in "fighting against terrorism and its destructive activities."
RIHS is run by an ultra-conservative Islamist group, whose political arm, the Islamic Salafi Alliance, holds four seats in Kuwait's 50-member parliament.
Its offices have been closed or raided over suspicions of terror ties by the governments of Albania, Azerbaijan, Bangladesh, Bosnia-Hercegovina, Cambodia and Russia.