He said in a statement: "Chanel engaged in conversations with Ms Streep's stylist, on her request, to design a dress for her to wear to the Academy Awards.
"After an informal conversation, I misunderstood that Ms Streep may have chosen another designer due to remuneration, which Ms Streep's team has confirmed is not the case. I regret this controversy and wish Ms Streep well with her 20th Academy Award nomination."
However, the screen legend didn't feel his response was adequate.
She added in her statement: "Mr Lagerfeld's generic 'statement' of regret for this 'controversy' was not an apology."
Meryl's stylist, Micaela Erlanger, previously insisted the actress would never go against her "personal ethics" by accepting money for wearing a dress.
She said: "As a stylist working with a nominee for any major event, it's industry standard for designers to propose gown ideas and sketches - some custom, some not, depending on the occasion.
"In the case of Chanel's submission, which was presented with full knowledge that Ms Streep and I - her stylist - were having conversations with various brands, we were shown sketches of a dress from their most recent couture collection. Although [it was] an exquisite gown from the existing collection, we decided to go in a different direction, with another designer.
"At no point were there any conversations regarding monetary compensation. Nor were any other brands considered based on their willingness to pay for placement. This is not how my company operates and is very much a practice in conflict with Ms Streep's personal ethics."
Lagerfeld previously claimed Chanel was told not to continue with the dress because Streep had "found somebody who will pay".
He said: "I made a sketch, and we started to make the dress (but then I get a phone call from her team a few days later which said): 'Don't continue the dress. We found somebody who will pay us.' After we gift her a dress that's €100,000, we found later we had to pay [for her to wear it].
"We give them dresses, we make the dresses, but we don't pay."
* nzherald's live red carpet coverage begins at 11.30am, with ceremony coverage beginning at 2.30pm.
- Bang! Showbiz