Dr Linda Katehi admitted that UC Davis, California, brought in a company "specialising in what is known as search engine optimisation".
But she denied that the institution had sought to "rewrite history".
Dr Katehi has faced calls to resign over the 2011 incident and its fallout.
Earlier this month, the Sacramento Bee newspaper reported that UC Davis hired the PR firm Nevins and Associates on a six-month contract at $15,000 (Â£10,400) per month.
The university was seeking to deal with the reaction to the incident in 2011 in which students who were protesting on the university's campus, near Sacramento, in California, were pepper-sprayed by a campus police officer.
The paper published a document which it said set out the firm's proposed strategy. The document read: "Nevins and Associates is prepared to create and execute an online branding campaign designed to clean up the negative attention the University of California, Davis, and Chancellor Katehi have received related to the events that transpired in November 2011."
The document also referred to "eradication of references to the pepper spray incident in search results on Google for the university and the Chancellor" via an "aggressive and comprehensive online campaign to eliminate the negative search results".
In a statement published on the university's website this week, Dr Katehi said: "In hindsight, we should have been more careful in reviewing some of the more unrealistic and ridiculous scope-of-work claims in the written proposals of our outside vendors.
"What might be accepted industry hyperbole in the private public relations world falls far beneath the high standards of a public institution of higher learning."
The Los Angeles Times reported last week that the University of California's student association had called on Dr Katehi to resign over the news.
In her statement, Dr Katehi acknowledged that an extra $1.6m (Â£1.1m) had been pumped into the institution's communications budget recently. She cited examples of the university's good works and said that any organisation in its position would seek to ensure those were highlighted.
The chancellor of a university has apologised over the hiring of a PR firm that promised to bury online search results about the pepper spraying of peaceful protesters.