Villeneuve claims he has only commercial backers behind him
Jacques Villeneuve has distanced himself from reports that the son of controversial Libyan leader Muammar Gaddafi is an investor in his new team.
The former world champion released a statement on his website confirming a link-up with Italy-based Durango.
"There are a number of rumours circulating at the moment and I wanted to clarify a few things before this gets out of hand," said Villeneuve.
Villeneuve Racing will attempt to join the F1 starting grid in 2011.
Canadian Villeneuve, 39, added: "The team will be a joint venture with Durango, and based out of Italy. To be clear, right now all the money comes from corporate sponsorship and not from personal investors."
Durango owner Ivone Pinton said last week that he had joined forces with Villeneuve, who is expected to drive for the planned team initially before exploring a different role.
Villeneuve, the 1997 world champion with Williams as well as a winner of the Indy 500 and CART series, last competed in Formula One in 2006.
The governing International Automobile Federation (FIA) has invited applications to make up a 13th team in F1.
It is expected to decide in the coming weeks whether any have what it takes to participate at a time when some teams are struggling to raise sponsorship.
Durango ran a car for Villeneuve in the Dubai-based Speedcar series until that folded last year - and then dropped out of the GP2 support series in 2009 due to financial problems.