The five men were killed a few days after the massacre
The Jammu and Kashmir Chief Minister Farooq Abdullah now says it appears that fake samples were sent suggesting "that those responsible had something to hide."
The killing of the 35 Sikhs took place just hours before the then US President Bill Clinton arrived in India and was one of the worst examples of violence in the territory in recent years.
It was highlighted by Delhi to support its accusations that Pakistan sponsors militant attacks in Kashmir.
'Mislabelling'
The state government ordered the samples to be taken from the dead men after protesters in Kashmir demanded an investigation into the affair.
Relatives of the dead men insisted their bodies be exhumed, saying that DNA tests would prove they were not foreign militants as claimed by the security forces.
But the laboratory in southern India to which the men's DNA samples were sent returned them, saying they were mislabelled and showed serious discrepancies.
It is not clear what errors were shown, but the Times of India newspaper said that some samples said to belong to female relatives in fact came from men.
In remarks to the Kashmir legislature on Friday, Mr Abdullah apologised for the injustice done and promised an investigation into the affair headed by a judge.
Mr Abdullah said fresh samples would be taken from the men's bodies.
'Encounter' allegation
At the time, the authorities insisted they were foreign militants from the Lashkar-e-Toiba and Hizbul Mujahideen groups - although the groups themselves denied any involvement in the Sikh massacre.
But allegations were made that they were in fact five local men picked up by the security forces and killed in a stage-managed encounter so they could be blamed for the massacre.
The Indian authorities have in the past been accused by human rights groups of summary killings and other abuses in Kashmir - charges the government always denies.
India has faced a militant insurgency in Kashmir since 1989.
Both India and Pakistan claim the territory as theirs.