During an afternoon hearing in a Copenhagen court Madsen said Wall was killed when a heavy hatch on the submarine fell on her head. Madsen claims he heard the accident but did not see it.
Madsen told prosecutors in open court that he then panicked and dump Wall's remains into the Öresund strait, the body of water between Sweden and Denmark.
A human torso, weighted down with metal, was found several days later on a beach south of Copenhagen and DNA testing revealed it to be that of Wall.
Prosecutors asked Madsen if he dismembered Wall before throwing her in the water and he denied it.
"He acknowledges that he violated the law on desecration of a corpse when he buried her at sea," Madsen's lawyer Betina Hald Engmark told Danish news outlets earlier on Tuesday. Madsen has been held on charges of "negligent manslaughter".
The 46-year-old suspect also denies killing Wall, who was writing a story about the man's homemade submarine.
The pair boarded the vessel on the evening of August 10 and set out from a harbor in Copenhagen. Wall was never seen alive after that.
Madsen was later rescued in the Öresund strait while the 18-meter vessel sank. He later told police there was an accident onboard that killed Wall and he had buried her at sea but not before saying he had left Wall on a beach alive before again heading out to sea.