Speaking at the Leveson inquiry into press ethics and standards, Richard Wallace said that he had no direct knowledge of journalists using hacking techniques, but added that the practice might have been hidden from him.
Wallace was showbiz editor at The Mirror during the editorship of Piers Morgan, who has claimed that it is unlikely phone hacking went on at the paper while he was in charge.
The Mirror's publisher Trinity Mirror has also insisted that its journalists work within the law.
However, former Mirror financial reporter James Hipwell claimed last month that phone hacking was a "bog-standard journalistic tool" used for gathering information.
Hipwell, who was imprisoned five years ago for writing articles about firms whose stock he owned, told the Leveson inquiry that he sat next to the Mirror showbiz team between 1998 and 2000 and continually overheard journalists talking openly about phone hacking.
Asked whether Hipwell's claims could be true, Wallace - the showbiz editor at the time - said: "No, not to my knowledge."
However, when quizzed on whether the practice of phone hacking could have been hidden from him, Wallace replied: "It might well have been."
Wallace said that a "zero tolerance" policy against phone hacking had been imposed at Mirror titles after the jailing of News of the World reporter Clive Goodman and private investigator Glenn Mulcaire for intercepting voicemails of members of the Royal household in 2007.
"It was a very strong message from the corporate arm that any illegality is just not on," he said.
Wallace said that ethical issues were "embedded within the culture of our newsroom", but he accepted that the paper had been "plain wrong" over a story that suggested Sienna Miller was drunk while playing with some children.
The story, mentioned in Miller's own evidence to the Leveson, involved an image that was allegedly cropped to make the actress appear under the influence of alcohol.
Wallace admitted that the story was "wrong" and said that it had come from a source that turned out to be "very unreliable".
He said that the case showed the perils of relying on just a single source, but claimed that The Mirror had taken "the bull by the horns" by quickly attempting to get to the bottom of the inaccurate report.
Also giving evidence today are the editors of the Sunday Mirror and The People, along with Trinity Mirror chief executive Sly Bailey.
More Leveson coverage:
> Richard Desmond: Express vilified over McCanns coverage
> Daily Mail receives 400 Pippa Middleton pictures a day
> Hugh Grant suspects Mail on Sunday phone hacking
> The Daily Telegraph paid source £150k for MPs' expenses story
> Charlotte Church offered coverage deal to sing at Murdoch wedding