Rumours have been circulating in the music industry for some time that the band may reunite, with reports of a multi-million pound offer for them to do so.
However, Squire, who is releasing a solo album in September, has said this is out of the question.
"I couldn't do it and not think about Spinal Tap," he admitted.
Former Stone Roses bassist Mani has said in the past that the band should reform for a live show because of the acrimonious way in which they split.
He also confirmed they had been offered "astounding financial incentives" to do so.
However, Squire has few links with the other former members of the band, including lead singer Ian Brown.
"I've not spoken to Ian for seven years," he said, adding that this would be a major obstacle in the way of the band ever reforming.
"Because we wrote together, we knew each other for the longest, that hurt the deepest."
The only contact the pair have had was when Brown was in prison in 1998 after being found guilty of an air rage incident.
"I sent him a Christmas card when he was in prison, and he said thanks through a third party," said Squire. "That's the only contact we've had."
The band, best known for the hits Fools Gold, Made Of Stone and One Love, split up in 1996, shortly after Squire left the band to form The Seahorses.
He was the second member of the original line-up to quit, following drummer Reni who walked out on the band jin 1995 just before they were due to tour.
Squire releases his debut solo album, Time Changes Everything, on 16 September.