The video was posted by RTL on YouTube for a single day a week ago and received 880,000 hits. The broadcaster has since removed the video from YouTube, but it has been picked up by other websites around the world.
"We wanted to show how easily users can be manipulated on the Internet with hoax videos," spokesman Heike Schultz of Cologne-based RTL told The Associated Press. "Therefore, we created this video of Michael Jackson being alive, even though everybody knows by now that he is dead - and the response was breathtaking."
Jackson died on June 25 in Los Angeles.
The video - posted under an "anonymous source" - shows a coroner's van entering what seems like a parking garage and the King of Pop getting out of the back with another person. The lighting is bad, the sound muffled and the footage appears amateurish.
"Unfortunately, many people believed it was true," Schultz said. "Even though we tried to create the video in a way that every normal user can see right away that it is a fake."
He said the video was shot near Cologne - "definitely not in the U.S." The van in the video had the word "CORONER" printed in English, suggesting it had been recorded in America.
RTL admitted to the hoax in an August 26 report on its daily news show Explosiv.
Hoaxes and rumours commonly spread like wildfire on the Internet. Videos of flying saucers and impossible stunts routinely are among the most-viewed on video-sharing sites, though purported evidence of the deceased being alive is less common than false rumors of someone's death.
The rise of Twitter and its real-time microblogging has quickened the pace. American actor Patrick Swayze, who is battling pancreatic cancer, had to declare that he is still alive this year after thousands of Twitter users spread news that he was dead. Actor Jeff Goldblum had to do the same.
The RTL spokesman said some Jackson fans were upset by the German broadcaster's actions.
"We didn't want to dishonour Michael Jackson, but we needed a strong name to get this experiment going," Schultz said. "Had we used Britney Spears, then the fans of Britney would have complained."
