The ministry ran tests on the vehicle before reaching a decision that could prompt buyers who believe they have been misled to seek compensation through legal means.
The industry ministry on the same day, however, said its own tests showed the Santa Fe's fuel economy was not overstated.
The transport ministry tested the fuel economy of 14 vehicles in South Korea after Hyundai and Kia said they overstated the fuel economy of about 900,000 vehicles in the United States, including the Santa Fe.
The admission was followed by a series of customer lawsuits in the United States, which led to a settlement proposal worth up to $395 million late last year.
The transport ministry on Thursday said its tests showed the Santa Fe's fuel economy was 8.3 percent lower than the vehicle's stated figure, exceeding the acceptable margin of error of 5 percent.
But the industry ministry said the Santa Fe's mileages were within the acceptable margin of error.
The government said the difference came from different testing methods and standards.