The two women, aged 17 and 19, were killed in Sopore town, 55 kilometres north of the region's main city Srinagar, on Monday night when they were dragged from their house and shot dead.
"The police claim about the involvement of our activists in the killing of the sisters is baseless," an LeT spokesman told reporters in Srinagar by telephone.
LeT is blamed by India for the attacks in Mumbai in November 2008 that left 166 people dead and hundreds injured.
New Delhi has consistently called on Islamabad to crack down on the LeT.
Other rebel groups in Kashmir and the chief minister of the region, Omar Abdullah, have been among those to condemn the murders.
Suspected Muslim rebels also carried out a grenade attack on the residence of a veteran pro-Indian politician in Sopore on Wednesday morning. No injuries were reported.
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