The rumour dates back to Austria, when Red Bull slammed 22-year-old Sainz for not pledging his future to Toro Rosso despite having his contract extended for 2018.
Now, amid the Renault switch rumours, Sainz said: "It would be very strange if I had not been told about this if it was happening.
"The last thing I heard was that I was a Toro Rosso driver," he told the Movistar broadcaster.
Renault boss Cyril Abiteboul issued a clearer denial, insisting: "Sainz will definitely not replace Palmer in Hungary."
But the Frenchman has previously indicated his interest in signing up Sainz for the future.
Red Bull chiefs Helmut Marko, Christian Horner and Franz Tost sound open to the possibility of releasing Sainz to another team for an appropriate buy-out fee.
"A lot is written in the media, but Carlos will be with Toro Rosso in Hungary," said Marko. "And I am currently assuming that he will drive with us for the rest of the season."
Toro Rosso boss Tost added: "According to my current knowledge, Carlos Sainz is driving for us in Hungary."
And Red Bull's Horner commented: "Carlos has a contract that expires in two years.
"If some other team wants him and wants to make us a serious offer, we are ready to consider it. But I doubt this will happen by Hungary."
Also linked with a potential mid-season Renault switch is Pascal Wehrlein, whose current Sauber seat could then be filled by the ousted Palmer.