Ed Sheeran made up the story about Princess Beatrice cutting his face with a sword as a joke, his pop star friend James Blunt has claimed.
Beatrice, 28, was pretending to "knight" Blunt when she swung the ceremonial blade over her shoulder, striking Sheeran, it was reported.
But Blunt, 43, has now said it was a joke he and Sheeran concocted.
He told Shortlist Magazine: "Ed was drunk, messing around, and he cut himself.
"We made a fancy story up, people fell for it. It was very embarrassing.
"It's bizarre that people fell for it. I blame him," he added, before joking: "He must be desperate - he's trying to sell records."
Reports first surfaced in November that Sheeran, 26, went to hospital to have stitches on his cheek after the incident occurred at a party at the Royal Lodge in Windsor.
It was reported while the Duke of York was away on business, Beatrice's mother Sarah, Duchess of York was at the do.
Sheeran, who still has the scar on his face, apparently returned to the party, which he is said to have attended with his girlfriend, Cherry Seaborn, after leaving hospital.
The Shape Of You singer has commented on the scar several times during interviews but has repeatedly said he is "not sure" if he can talk about how it happened.
Speaking on the Graham Norton Show in January, Sheeran said: "For two weeks after, I had a huge gash on my face and would tell people I fell and then suddenly, the story came out, the alleged story came out."
He told the BBC1 programme: "I can't talk about it. I don't know what will happen if I do."
He added: "I remember telling my dad about it and he didn't believe me and said, 'No, what really happened?"'
A spokesman for Beatrice and Sheeran's publicist have been contacted for comment.
Blunt's spokesman said they would not be commenting.