The ex-model trashed Morgan's earlier testimony, saying that one of her private voicemails, which was played to the CNN interviewer and former tabloid editor, could have been obtained only through phone hacking.
Mills spoke under oath at Lord Justice Brian Leveson's inquiry into the practices of Britain's scandal-hit press, and said two dozen messages left for her by the former Beatle were intercepted by a journalist working for British newspaper group Trinity Mirror.
She said the incident happened after she and McCartney had a fight in January 2001, when McCartney, then her boyfriend, bombarded her with phone calls.
"There were about 25 messages, all asking for forgiveness, (asking:) 'Would I come back?"' Mills said. "One of them said: 'Please forgive me,' and he sang a little ditty of one of his songs into the voicemail."
She said she found it strange that the messages were listed as having been listened to even before she had accessed them, but said she didn't realize what had happened until the Mirror journalist -- unnamed for legal reasons -- called her up and confronted her with details of the battle.
"I said: 'There's no way that you could know that unless you have been listening to my messages,"' she told the inquiry. "And he laughed."
The messages left for Mills by McCartney are at the center of the allegations against CNN star interviewer Piers Morgan, who was editor of the Daily Mirror tabloid at the time. Morgan wrote in 2006 that he had once been played an apologetic message left by McCartney for Mills, describing it in detail and noting that McCartney "even sang 'We Can Work It Out' into the answer phone."
Called before the U.K. inquiry last year, Morgan denied ordering anyone to hack a phone or writing stories based on hacked messages. He acknowledged listening to Mill's voicemail message but stubbornly refused to say anything about how he had gotten it.
Morgan even left open the possibility that the voicemail had been played to him with Mills' approval, but Mills said Thursday that was impossible.
"Never," she said. "Never ever."
Mills married the popular McCartney in 2002 and had a daughter with him before they divorced in 2008. She sought and got a substantial divorce settlement, becoming a tabloid hate figure after they separated. She is a fierce critic of tabloid journalists in general and Morgan in particular.
Morgan got some support from famed public relations guru Max Clifford, who testified before the inquiry later Thursday. He had harsh words for Mills, denying her allegation that he'd threatened her if she didn't hire him as a publicist.
"There's an awful lot of things I could say about Heather Mills," he said, striking an ominous tone.
Clifford also defended Morgan against one allegation of phone hacking, saying that the editor had won one of his biggest scoops -- the news that Tony Blair's wife Cherie was pregnant -- the old-fashioned way.
Clifford said that the pregnancy story came from "someone who was very close to Cherie Blair and she confided in," he said. "She told me. I gave it to Piers. It did not come out as a result of phone hacking."
Leveson's inquiry was set up in the wake of Britain's tabloid phone-hacking scandal, which shocked the country with revelations that journalists at Rupert Murdoch's News of the World routinely eavesdropped on the private communications of those in the public eye.
Murdoch closed the 168-year-old tabloid, many journalists have been arrested and several top executives have resigned. More than 60 victims have successfully sued the newspaper for breaking into their phones and other violations, and about 60 more are in the process of preparing lawsuits.
Among them was Clifford, who said he personally settled his own phone-hacking lawsuit with Murdoch protege and former News of the World editor Rebekah Brooks over lunch for just under 1 million pounds.