Rev Dr Paul Overend, 53, who was appointed Canon Chancellor at Lincoln Cathedral in 2017, is accused of grabbing the woman and kissing her at a party while he was a chaplain at Cardiff University in 1997.
Neil Evans, defending, told Cardiff Magistrates' Court his client denied indecent assault and said the case was a "fully contested matter".
Mr Evans said: "The defence say this incident didn't happen at all. No misunderstanding, it just didn't take place."
The case was sent to Cardiff Crown Court with a hearing set for 2nd January.
Rev Overend spent seven years as university chaplain in Cardiff before teaching philosophy and ethics at the university and at Liverpool Hope University.
He was given the full-time post of chancellor at Lincoln Cathedral in November 2017, leading the cathedral's work on public theology and Christian education, before stepping down 14 months later when he was charged by South Wales Police.
Rev Overend , from Lincoln, was granted unconditional bail.
Stay up to date with the latest news stories from a Christian perspective. Sign up to our daily newsletter and receive more stories like this straight to your inbox every morning.