Kraft, answering questions from a prosecutor and one of Hernandez's attorneys on the witness stand in a Massachusetts courtroom, recalled a private conversation that he had with the star Patriots tight end on June 19, at the Patriots' Gillette Stadium, as news spread that Hernandez was being investigated in Lloyd's death.
"He said he was not involved," Kraft testified in the courtroom in Fall River. "He said he was innocent."
Hernandez has been charged with murder and has pleaded not guilty to orchestrating the death of Lloyd, a semipro football player who was found dead in Massachusetts on June 17, 2013.
Hernandez also has pleaded not guilty to a gun and ammunition charge. His co-defendants, Ernest Wallace and Carlos Ortiz, also pleaded not guilty and will be tried separately.
Kraft testified that he asked to speak with Hernandez in an office near a weight room in the stadium, and asked the player to look him in the eye and tell him if he was involved in Lloyd's death.
According to Kraft, Hernandez told him during that meeting that he hoped the time of Lloyd's death "came out," because Hernandez had been at a club that night.
According to testimony from Hernandez's fiancée, Shayanna Jenkins, the player had not been at a club, but was at dinner with her and some friends before the shooting.
Mel Robbins, a CNN legal analyst, called Kraft's testimony "explosive."
"What a great, great witness for the prosecution," she said. "Basically what happened is Aaron Hernandez lied to his boss. And the only way you rebut it is if you put him on the stand."
How did Hernandez know when the murder happened, Robbins asked, unless he was there?
The Patriots' owner also testified, when asked by a defense attorney, that he'd never had any problems with Hernandez, and that the player was always respectful to him.
The billionaire magnate of The Kraft Group, a company with interests ranging from paper and packaging concerns to sports and entertainment, said Hernandez always greeted him with a hug and kiss.
Asked by the defense why Hernandez was signed to a $40 million long-term contract, Kraft said simply: "He's a very good player."
At times during his 30 minutes or so on the witness stand, Kraft seemed uncomfortable.
"Do you work?" Bristol County District Attorney William McCauley asked Kraft.
"I think so, yes."
Asked where he worked, Kraft responded, 1 Patriot Place, or Gillette Stadium, where the Super Bowl champions play their home games.
"What do you do for work?"
"Whatever they ask me to do."
Outside court, surrounded by cameras, Kraft expressed sadness over Lloyd's death.
"A man died," he said. "This is about a man being killed. It's unfortunate."
Later, Mark Briggs, head of security at Gillette Stadium, testified that he also asked Hernandez whether the former star was telling the truth about Lloyd.
"He swore on the baby's life that he was telling the truth," Briggs said.
Hernandez was arrested in connection with Lloyd's death a week after that meeting with Kraft. The Patriots released Hernandez less than two hours after the arrest on June 26, 2013.
Jenkins, 25, and Hernandez are the parents of a young daughter. Jenkins' sister Shaneah was dating Lloyd, 27, who was shot six times, according to prosecutors.
The trial began in late January.