Its disclosure comes 10 days before Pope John Paul is due to visit Fatima, one of Catholicism's most revered sites.
Officials said the sanctuary asked a Portuguese bank in 1970 to melt some of its gold, and when it received the equivalent in bars, it discovered Nazi insignia on some of them.
The bars were sold between 1982 and 1986 to finance building work at Fatima, which attracts pilgrims from around the world.
Traded with Nazis
Portugal traded with Nazi Germany but last year a commission cleared the period's right-wing leadership, led by Antonio Salazar, of any wrongdoing.
During his visit, the Pope is due to beatify two of three shepherd children whom Catholics believe witnessed several apparitions by the Virgin Mary.
His visit on 13 May comes on the 83rd anniversary of the first apparition.
A statement signed by Fatima's rector, Luciano Guerra, confirmed a report in weekly magazine Visao in March that the sanctuary had held Nazi gold, but it did not say how much.
Visao said 1976 bank statements showed that Fatima held four bars of Nazi gold, weighing a total 50 kilos.
It added that the accounts of the sanctuary, around 70 miles north of Lisbon, had at various times held up to 258kg kilos of gold bars made from melting down the offerings of pilgrims and worshippers.
Portugal was neutral during the World War II, legally allowing it to trade with both the Allies and the Axis powers.
Lucrative trade
It received gold in payment for trade with Germany.
Portugal stopped taking gold in 1944 after being warned by Britain and the United States that some of it could be "tainted" because Germany had raided the central banks of countries overrun in the early years of the 1939-45 conflict.
Mr Guerra said Fatima had done nothing of which it need be ashamed, although he added that were the bars still in its possession it would do its utmost to discover their exact origin.
"We would ask ourselves how we could contribute to the making good of any injustice," he added, while ensuring that the sanctuary did not suffer financial loss.
"But if, as is likely, we did not discover anything, we could have tried to preserve some bars as a memorial of that horrible period in the history of mankind," he said.