The 38-year-old engineer Waheed Borsh was arrested on July 16 from the city of Jabaliya in the northern Gaza Strip.
Israel's Shin Bet security service said Borsh used his position with the UNDP "to provide material assistance to Hamas' terrorist/military efforts", Xinhua news agency cited.
According to the Shin Bet, during the investigation, "it was discovered that he had been instructed by a senior member of Hamas to redirect his work for UNDP to serve Hamas' military interests".
In 2003 Borsh started working for the UNDP, one of the world's largest development and aid organisations.
Borsh confessed that he carried out various tasks for Hamas, the Shin Bet said.
"For example, last year he helped build a military jetty in the northern Gaza Strip -- utilising UNDP resources -- to be used by Hamas' naval forces. Also in 2015, he acted to persuade UNDP managers to prioritise the rehabilitation of housing in areas populated by Hamas members," a statement said.
The indictment was the second time in less than a week that Israel accused a Palestinian worker of an international aid organisation of helping Hamas, the Palestinian Islamist movement which controls Gaza.
"Based on the information available to us at this time, we have no reason to believe that the allegations are true," US-based World Vision said in a statement while rejecting the allegation.
Hamas has been controlling the Gaza Strip since it won the 2006 election. Israel imposed a blockade on the strip in the wake of the takeover, allowing a restricted transfer of goods in and out of the Palestinian enclave and limiting most exits and entry of people.
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