Oscar Pistorius offered Reeva Steenkamp's family 375,000 rand (£21,305) as compensation for killing her after already making monthly payments to them, a court has heard.
But chief prosecutor Gerrie Nel said the Steenkamps rejected the lump sum which they called "blood money".
Mr Nel said the Steenkamps would also hand back the other payments Pistorius had given them, the court was told.
Pistorius' probation officer Annette Vergeer, called by the defence, revealed the payments on the second day of the athlete's sentencing hearing in Pretoria, which was watched by his father Henke and Ms Steenkamp's mother June.
Ms Vergeer said Pistorius had been paying 6,000 rand (£350) per month to the Steenkamps as a form of maintenance or compensation - though the payments stopped a while ago.
Suggesting the athlete was genuinely remorseful for the killing, she told the court he sold one of his cars for 375,000 rand and offered the money to the Steenkamps as a lump sum.
Ms Vergeer said: "He sold his last asset, his motor vehicle, and requested the amount be paid into the account of the Steenkamps' lawyers should they wish to accept the amount.
"I was informed they did not want the amount of money offered by the accused."
Cross-examining Ms Vergeer, Mr Nel said: "Did you know that the deceased's mother went so far as to say she does not want blood money?"
Ms Vergee replied: "You can place it on record now m'lady that the money was in fact rejected and no further legal action would be taken."
Reporting from Pretoria, Sky's Alex Crawford said: "These payments had not been known before.
"The Steenkamps' lawyer said this was because Pistorius' defence team asked for it to be kept secret."
When asked about the payments, the Steenkamps' lawyer Dup de Bruyn said: "I am not commenting because I'll get cross-examined about it. They are going to pay back every cent of it."
Ms Vergeer also said Pistorius was sorry and heartbroken at what had happened and that prison "would not assist him but break him".
Fanning herself while in the witness box, Ms Vergeer said Pistorius did not appear to be "such a danger to society" that a prison sentence was required.
However, prosecutor Mr Nel suggested she gave evidence on issues she knew little about.
The athlete arrived at the North Gauteng High Court without his usual phalanx of police or minders, while in an unusual move, Judge Thokozile Masipa appeared flanked by six armed guards.
Pistorius, 27, was cleared of murdering his girlfriend but found guilty of culpable homicide - the equivalent of manslaughter in the UK.
The double-amputee Olympian could receive a fine and a suspended jail sentence or up to 15 years in prison.
The prosecution are pushing for him to serve a prison sentence for the killing, while his defence team submit he should serve no more than house arrest or community service.
His sentencing continues on Wednesday.
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