Van Damme, now 51, said it would be "abnormal" not to have had an affair with the Australian singer.
The pair were costars on the set of action flick "Street Fighter" at the time, and were rumoured to have had a fling, reported The San Francisco Chronicle.
In an interview with The Guardian, Van Damme, who may have been married at the time of the affair, finally confessed to the fling, and said he found it impossible to resist Minogue's charm and beauty.
When asked by The Guardian about the affair, he said: "I tell you what, you should ask her."
"She'll have a better memory. I'm 51 years old, do you know how much I was punched in the face on The Expendables? No, no. No. And let's just say it happened, so what? Who wants to know?"
"Sometimes you let go of stuff ... I don't know, maybe."
"Yes. OK. Yes, yes, yes. It happened. I was in Thailand, we had an affair. Sweet kiss, beautiful lovemaking. It would be abnormal not to have had an affair, she's so beautiful and she was there in front of me every day with a beautiful smile, simpatico, so charming, she wasn't acting like a big star. I knew Thailand very well, so I showed her my Thailand. She's a great lady."
Vann Damme has been promoting his new film, The Expendables 2, also starring action heroes, Arnold Schwarzenegger and Bruce Willis.