The woman, whom Te'o says he met only online, never in real life, did not exist, the website Deadspin reports.
She was invented by unknown perpetrators, and fooled Te'o along with everyone else, the 21-year-old linebacker claims.
"This is incredibly embarrassing to talk about, but over an extended period of time, I developed an emotional relationship with a woman I met online," Te'o said in a statement Wednesday. "We maintained what I thought to be an authentic relationship by communicating frequently online and on the phone, and I grew to care deeply about her."
He added: "To realize that I was the victim of what was apparently someone's sick joke and constant lies was, and is, painful and humiliating."
The woman, whom Te'o knew as Lennay Kekua, was widely reported last year to have whispered "I love you" to Te'o over the phone just before she died. Compounding the heartbreak for Te'o, his grandmother died the same week.
Notre Dame says Te'o approached the school later in the year after realizing he'd been fooled.
"On Dec. 26, Notre Dame coaches were informed by Manti Te'o and his parents that Manti had been the victim of what appears to be a hoax," the university said in a statement Wednesday. "Someone using the fictitious name Lennay Kekua apparently ingratiated herself with Manti and then conspired with others to lead him to believe she had tragically died of leukemia."
The university said it launched an investigation, which is ongoing.
Deadspin and others have questioned how Te'o could have been deceived for so long, and speculated that he might have been involved in the hoax, perhaps to boost his chances of winning the Heisman Trophy. (That prize went to Texas A&M's Johnny Manziel in December.)
But Notre Dame is backing the player.
"While we still don't know all of the dimensions of this … there are certain things that I feel confident we do know," Notre Dame athletic director Jack Swarbrick said at a press conference. "The first is that this was a very elaborate, very sophisticated hoax, perpetrated for reasons we don't understand."
Wiping away tears, Swarbrick said of Te'o: "The thing I am most sad of is, the single most trusting human being I have ever met will never be able to trust in the same way ever again."