His remarks came during an Oval Office meeting where officials in President Donald Trump's administration said they were not required to bring back Salvadoran Kilmar Abrego Garcia, despite a US Supreme Court order saying they must facilitate the Maryland resident's return.
Abrego Garcia's case has drawn attention as the Trump administration has deported hundreds of people to El Salvador with help from Bukele, whose country is receiving $US6 million ($A10 million) to house the migrants in a high-security mega-prison.
The US government has described his deportation as an administrative error.
But in court filings and at the White House on Monday, the administration indicated it did not plan to ask for Abrego Garcia back, raising questions about whether it is defying the courts.
Bukele told reporters he did not have the power to return Abrego Garcia to the US.
"The question is preposterous. How can I smuggle a terrorist into the United States?" Bukele said, echoing the Trump administration's claim that Abrego Garcia is a member of the MS-13 gang, which the US labels a terrorist organisation.
Abrego Garcia's lawyers deny the allegation he is a gang member, saying the US has presented no credible evidence.
The US sent Abrego Garcia to El Salvador on March 15.
Trump called reporters asking whether the administration would follow the order for his return "sick people".
"The foreign policy of the United States is conducted by the president of the United States, not by a court," Secretary of State Marco Rubio said during the Oval Office meeting.
Trump said he would send as many people living in the US illegally to El Salvador as possible and help Bukele build new prisons.
The migrants El Salvador accepts from the US are housed in a facility known as the Terrorism Confinement Centre, which critics say engages in human rights abuses.
Lawyers of the detained migrants say they are not gang members and had no opportunity to contest the US government assertion that they were.
In March, after a judge said flights carrying migrants processed under the 1798 Alien Enemies Act should return to the US, Bukele wrote "Oopsie... Too late" on social media alongside footage showing men being hustled off a plane at night.
An immigration judge had previously granted Abrego Garcia protection from being deported to El Salvador, finding that he could face gang violence there.
He held a permit to work in the US, where he had lived since 2011.
The US Supreme Court last week upheld a lower court ruling directing the administration to "facilitate and effectuate" his return.
A district court hearing is scheduled for Tuesday.
