"We are here to play cricket and we do not want to do anything inappropriate," said Pakistan team manager Haroon Rashid, adding that the allegation in the Herald Sun was a massive slur on the players.
The Centre Against Sexual Assault in a Melbourne suburb told the newspaper that the alleged attack took place in a city hotel, but the woman was not yet prepared to make a complaint to police.
The attack was alleged to have taken place while the Pakistan team was in Melbourne for the Boxing Day Test against Australia.
"We think it's rubbish," Pakistan Cricket Board spokesman Abbas Zaidi said in Islamabad on Friday.
"It is something very intriguing that an incident that happened three or four weeks ago -- with no lawyers hired and no police complaint made -- has been reported in the media," he said.
"It is difficult to say what happened because there are no facts available to us in the matter, or to the team management. The team management has spoken to lawyers in Australia and are taking their advice.
"If, God forbid, this allegation is proved, the absolute strongest and harshest possible action will be taken," he added.
The Pakistan team had been stunned by the allegations, said Pakistan coach Bob Woolmer in Sydney, where the team was training on Friday ahead of its tri-series one-day game against Australia on Sunday.
Woolmer said he had spoken to the players about the accusation during Pakistan's training session at the Sydney Cricket Ground on Friday and all had expressed shock and surprise at the claims.
"Stunned really," Woolmer said, describing the players' reaction.
"Personally I don't think anyone in the dressing room was involved."
He said the allegations were being taken "very seriously" and were being "dealt with in-house".
But he said he could not comment further until more information was available.
"We don't know what the truth is or what has actually happened and until we find out I'm afraid we don't have much more to say at the moment," Woolmer said.