Two men -- a Buddhist and a Muslim -- died in riots in the country's second city Mandalay that flared on July 1 following social media reports that the Muslim men had raped a Buddhist employee at their tea shop.
More than 20 others were wounded as violence rocked the city for several days, the latest in a series of religious clashes that have bedevilled the former junta-run nation for two years.
But a police investigation found the woman was paid to fabricate the accusation against the men, the New Light of Myanmar reported.
The report, citing the Ministry of Home Affairs, said a medical examination of the woman -- named as Phyu Phyu Min -- found "no sign of rape or other violence".
"After a detailed investigation she confessed that she accused the two men because she was paid" to do so by two other people who apparently had a personal dispute with the tea shop owners.
The woman has been arrested alongside one of the people alleged to have paid her, the report said.
The unrest, which saw a curfew imposed as security forces moved in to disperse angry mobs, again spotlighted the incendiary nature of relations between Myanmar's Buddhists and the Muslim minority.
Buddhist-Muslim clashes have left at least 250 people dead and tens of thousands displaced since fighting broke out in Myanmar's western state of Rakhine in 2012.
Most of the victims have been Muslims. Violence has often erupted as a result of rumours or individual criminal acts.
While Mandalay has a sizeable Muslim minority and also plays host to a group of nationalist Buddhist monks, it had not suffered religious unrest on such a scale before.
Radical Buddhist monks have been accused of fanning tensions, with Mandalay-based hardline cleric Wirathu posting a link to the rape allegations just hours before the unrest broke out.
The deadly religious flare-ups have prompted warnings that the country's fragile transition to democracy could be imperilled.
Responding to the rioting, President Thein Sein said "serious action" would be taken against those involved and hinted that hard-won media freedoms could be compromised if unrest continued.