The radical preacher, who is on trial under the name of Mustafa Kamel Mustafa, was testifying for a third day in Manhattan Federal Court.
He has pleaded not guilty to charges that he conspired to support terrorism by helping the hostage takers and by later conspiring with Seattle men to create a training camp in Oregon, on America's west coast.
Hamza said he supplied a satellite phone to the men but was angry when he learned they had taken people hostage.
He said he urged the captors to let the hostages speak to their embassies and families so the Yemen government would not overreact and cause deaths. Four hostages died.
Hamza was deported from the UK back to his native Jordan last July following an eight-year legal battle with the Government. He had been in jail in the UK since 2004 on charges of inciting racial hatred and encouraging followers to kill non-Muslims.
He was subsequently extradited to America to face terror charges.
Hamza, who has a glass eye and uses a prosthetic hooked hand, earlier told the court he had lost both hands and his eye in an accidental explosion while working for the Pakistani military more than 20 years ago.
The trial continues.