"There will be no exchange," Sarkozy said during an interview on French television. "This is blackmail."
Sarkozy was responding to President Mahmoud Ahmadinejad who said Tuesday that Iran would not grant amnesty to Clotilde Reiss unless France was willing to help Iranian prisoners held on its territory.
Reiss was arrested at a Tehran airport on July 1 for taking part in protests triggered by Ahmadinejad's re-election the previous month.
The 24-year-old university teaching assistant appeared in court in a mass trial on August 8 and Iranian state media said she was accused of "collecting information and provoking rioters."
France insists that Reiss is not guilty and has managed to negotiate an agreement allowing her to remain at the French embassy in Tehran pending her verdict.
French officials believe Ahmadinejad was referring to Iranian national Ali Vakili Rad, jailed in France for the 1991 murder in Paris of Shapour Bakhtiar, Iran's last prime minister under the shah, and Majid Kakavand.
Police were acting on a request from the United States when they arrested Kakavand for allegedly purchasing sensitive technology on the Internet and his extradition is before the French courts.
"Do you think I would be ready to swap the assassin of Shapour Bakhtiar for a young student whose only crime is to speak Iran's language and love Persian civilisation?" Sarkozy said.
Asked about Reiss's fate, Ahmadinejad told France 2 television on Tuesday that "there were some Iranians in prison in France for years. These are prisoners who also have a family, they also have a father and a mother."
"Unfortunately we have seen no action by the French government in favour of these prisoners," he said.
French foreign ministry spokeswoman Christine Fages earlier said "there is no comparison between the situation of Clotilde Reiss and these people."
