Mr Modi, who was scheduled to start a five-day visit to the US from Sunday, addressed a meeting in New Yorks Madison Square via a satellite link on Monday.
Addressing a press conference, US Ambassador in India David C Mulford confirmed that the denial of visa to Mr Modi was based on a National Human Rights Commission (NNRC) report that accused Modi of not doing enough to stop the post-Godhra anti-Muslim riots in Gujarat.
The US Department of State denied Mr Modi the visa under section 214 (b) of the Immigration and Nationality Act because he was not coming for a purpose that qualified for a diplomatic visa.
Mr Modis existing tourist/business visa was also revoked under section 212 (a) (2) (g) of the Immigration and Nationality Act. Section 212 (a) (2) (g) makes any foreign government official who was responsible for or directly carried out, at any time, particularly severe violations of religious freedom ineligible for a visa to the US, he said.
Mr Mulford said that the ministry of external affairs requested the Department of State to review the decision. Upon review, the State Department re-affirmed the original decision, he said.
This decision applies to Mr Narendra Modi only and is based on the fact that, as head of the State government in Gujarat between February 2002 and May 2002, he was responsible for the performance of state institutions at that time, he pointed out.
The US ambassador said that action was not directed at the BJP institutionally or Gujaratis as a community.
Reacting sharply to the US decision, the Indian government expressed regret that the US has not revised its decision not to grant visa to Gujarat Chief minister Narendra Modi inspite of its request for an urgent reconsideration.
PTI adds: In a veiled attack on the US and its growing ties with Pakistan, Gujarat chief minister Narendra Modi said on Monday that, unfortunately, theocratic states and military dictatorships were scoring in international diplomacy.
Addressing Indian-Americans at Madison Square garden in New Jersey, US, through video conferencing after being denied a US visa, Mr Modi said a disinformation campaign was being launched to malign India.