A swiftly deleted tweet from his main @narendramodi handle said the Indian government had officially bought 500 bitcoin and was "and distributing them to all residents of the country", along with a scam link.
His office tweeted that the account was "very briefly compromised" and that Twitter had since restored control.
It was the second time one of Modi's Twitter accounts was hacked, after another was taken over last year to send out a tweet urging the public to donate to a fake coronavirus relief fund.
Sunday's hack ironically comes as India prepares to clamp down on a flourishing cryptocurrency trade with a new law likely to be introduced in parliament this month.
Details of the legislation remain unclear but the government has flagged a broad ban on private digital currencies.
The local crypto market has boomed since the Indian Supreme Court overturned a previous ban last year, with Bollywood actors and cricket stars fronting ad campaigns for local exchanges.
Modi himself said last month that cryptocurrencies could "spoil our youth" and the central bank has repeatedly warned they could pose "serious concerns on macroeconomic and financial stability".