"We have been told by Lewis Hamilton's management team that the story is untrue," a McLaren spokesman said.
Former Formula One team owner Eddie Jordan, who gave Schumacher his debut in the sport in 1991 and is now an F1 analyst for BBC television, told the broadcaster he had heard talks were advanced with Mercedes.
"I believe Hamilton and Mercedes have already agreed personal terms and a deal could be imminent," the BBC quoted the Irishman as saying ahead of Sunday's Italian Grand Prix at Monza.
"Some weeks ago I said on TV that I felt Lewis was on the move and I had an idea at the time he had been speaking to Ferrari, which we now know is true," Jordan said. "But I can now confirm his people have had meetings with Mercedes."
A spokesman for Hamilton told Reuters his management was "in advanced negotiations with McLaren regarding a new contract. More importantly, Lewis is focused on Monza and competing strongly for the championship".
Seven-times world champion and former Ferrari great Schumacher, 43, is in the last year of his contract with Mercedes and has said he will not make any announcement about his plans until next month.
The German has not won a race since his comeback in 2010 and appeared on the podium just once.
Hamilton, 27, has been backed by Mercedes-powered McLaren since he was in his early teens and has only ever driven for the Woking-based team. Contract talks between the two sides have been going on all season.
Mercedes are seen as Hamilton's best bet outside McLaren, with champions Red Bull already having a confirmed line-up for 2013 and a move to Ferrari unlikely given that the Briton and Fernando Alonso had a difficult relationship at McLaren in 2007.
One paddock source told Reuters it would be amazing if Hamilton's management had not talked to rival teams and Mercedes were sure to be one of them.
Mercedes are also one of the few teams with winning potential who would be able to pay the sort of salary Hamilton is looking for.
Formula One supremo Bernie Ecclestone fuelled further speculation about Schumacher at last weekend's Belgian Grand Prix, the German driver's 300th, when he spoke to Jordan before the start on live television.
"I'll be sad to see him go," said the 81-year-old Briton. "I would have liked to see him win again." Ecclestone then said he did not know if Schumacher would be retiring.
There was no immediate comment from Mercedes about Hamilton.