Speaking at Prime Minister's Questions yesterday, Mr Corbyn quoted Mr Paterson as saying "only a madman would leave the single market".
In response the Shropshire MP wrote to the Labour leader to over the matter, which Mr Paterson said "is a very common misquotation, frequently repeated on Twitter".
A copy of the letter, which opens "Dear Jeremy", and is signed off "yours ever, Owen", was posted by the Conservative on his Twitter account.
He wrote: "At Prime Minister's Questions today, you told the House that I had once said: 'Only a madman would leave the Single Market.' I did not say this. However, it is a very common misquotation, frequently repeated on Twitter, so I can understand how you have been unwittingly misled."
Mr Paterson explained how part of the quote had originated from a TV interview.
He said: "In an interview with Dermot Murnaghan for Sky News in October 2015, I said: 'Only a madman would actually leave the market. It's not the EU, which is a political organisation, delivering the prosperity and buying our goods. It's the market. It's the members of the market and we will carry on trading with the market. Are we really suggesting that the fifth largest economy in the world is not going to come to a satisfactory trading arrangement with the EU? Are we going to be like Sudan and North Korea? I mean, it's ludicrous this idea that we are going to leap off a cliff into a dark space. We will carry on trading'."
Mr Paterson's correspondence concludes by asking Mr Corbyn to make his colleagues aware of its content.
He said: "I hope that this is clear and that you will avoid misquoting me in future. I would be grateful if you would draw your colleagues' attention to this letter so that they do not make a similar mistake."