PSA denies any use of fraudulent engine software, a spokesman said in response to the newspaper report.
So-called "defeat devices" restrict exhaust output of toxic nitrogen oxides (NOx) under regulatory test conditions while letting emissions far exceed legal limits in real-world driving.
In February, PSA became the fourth carmaker to be referred to French prosecutors by the country's DGCCRF watchdog over suspected emissions test-cheating, after Volkswagen Group, Renault and Fiat Chrysler Automobiles.
PSA's engineering chief acknowledged at the time that emissions treatment in the group's diesels was deliberately reduced at higher temperatures to improve fuel efficiency and carbon dioxide (CO2) emissions in out-of-town driving, where NOx output is considered less critical.
According to Le Monde, an internal PSA document obtained by DGCCRF investigators includes discussion of the need to "make the 'defeat device' aspect less obvious and visible."
However PSA insists there is nothing fraudulent or illegal about its engine calibrations. "PSA denies any fraud," the company said on Friday.
PSA said its strategy on engine settings favors low NOx emissions in cities while ensuring the best NOx/CO2 balance on open roads.
It said it complies with regulations in every country where it operates and its vehicles "have never been equipped with software or systems making it possible to detect compliance tests and to activate a pollutant treatment device that would be inactive during customer use."
PSA's statement pointed out that it is the only automaker to publish real world CO2 emissions, an approach that will be extended to NOx emissions by the end of the year.
Automotive News Europe contributed to this report