In his reply Waugh said he was just doing his job as a captain when he dropped the leg-spinner in 1999 for a Test in the West Indies.
Earlier this week, Warne blasted Waugh as "the most selfish cricketer I have played with".
The grudge was related to Waugh's decision of dropping Warne from the playing XI for the final Test on a tour of the West Indies 17 years ago. It sparked a backlash against the legendary leg-spinner on the social media with Waugh issuing a short statement the next day that read, "I'm not justifying his comments with an answer."
But today, he opened up, explaining that the decision to drop Warne was tough but part of his job as the captain.
"To be fair, not only Shane, any player I had to tell was dropped wasn't easy," Waugh was quoted Triple M commercial radio.
"It wasn't easy telling Adam Dale he was dropped for a Test match or Greg Blewett. There were a number of players I had to tell they weren't playing," he said.
"As a captain, that is the hardest thing to do. But it's also why you're the captain, because people expect you to make the tough decisions for the benefit of the team," Waugh added.
"You have got to do that at times and you have got to be prepared not to be liked by everyone." Warne, speaking on an episode of reality TV show "I'm a celebrity. Get Me Out of Here", where he is a contestant, said he was "really disappointed" at the decision to drop him and felt like Waugh was making him "a scapegoat".
"I don't like Steve Waugh for a lot of other reasons, but that was the reason," he said on why the two fell out.
Waugh, who played 168 Tests, 57 as captain, said a key lesson he learned as captain was to take risks and follow his gut feeling.
"I guess, the main thing as a captain and leader, as long as people respect your decision, that is all you can ask," he said.
"You have got to take a bit of a risk sometimes. It's not always the obvious thing to do. Sometimes it can be gut feel, it can be based on facts...at the end of the day, you are a leader because people expect you to make a choice," Waugh added.
Waugh has previously admitted the decision to dump Warne cost him his friendship with the spin king, but in his book "The Meaning Of Luck", he said that it helped shape and define him as a captain.