China had said it was willing to play a "constructive role" in improving relations between India and Pakistan, especially after the increased hostility along the Line of Control, a de facto border that divides the disputed Kashmir valley between the two nuclear-armed neighbours.
However, talking to reporters on Thursday, a spokesman for the Ministry of External Affairs turned down China's offer.
"We are ready to talk Kashmir with Pakistan, but no third-party mediation," Gopal Baglay said.
"Our stand is absolutely clear. You are aware that the heart of the matter is cross-border terrorism emanating from a particular country that threatens peace and stability in the country, region, and the world."
China's Foreign Ministry spokesman Geng Shuang said India and Pakistan are important South Asian countries but the "situation in Kashmir has attracted the attention of the international community".
The comments came at a time when India and China are disagreeing over the construction of a road in the Doklam area near the Sikkim state of India.
Pakistan's Foreign Office, meanwhile, said the country's government believed in resolving all issues through dialogue.
"The UN chief, the US president, the Chinese leadership and others have offered to play a role in resolving the Kashmir issue," said the Pakistan Foreign Office spokesman Nafees Zakaria.
Kashmir, a Muslim-majority Himalayan region, is administered by India and Pakistan in parts and claimed by both in full.
Pakistan and India have fought three wars since gaining independence from British rule in 1947. Two of those wars have been over Kashmir.
Kashmiri resistance groups have been fighting against Indian rule for independence, or for unification with Pakistan.
More than 70,000 people have reportedly been killed in the conflict since 1989. India maintains more than half a million troops in the disputed region.
Source: News agencies