Hollande's remarks, made on a visit to the French Polynesian capital, are the clearest admission yet of the damage caused by the testing programme.
"I recognise that the nuclear tests between 1966 and 1996 in French Polynesia have had an environmental impact, causing health consequences," Hollande said in Papeete while on a tour of the Pacific.
France carried out the 193 nuclear tests on the atolls of Mururoa and Fangataufa until former president Jacques Chirac declared an end to the programme in the 1990s.
Only around 20 people have received compensation for the spread of cancers allegedly linked to the tests from among some 1,000 plaintiffs, and Hollande said the process would now be reconsidered.
"The processing of applications for compensation for victims of nuclear tests will be reviewed," he said.
Some 150,000 civilian and military personnel took part in 210 nuclear tests carried out between 1960 and 1996 by France in the Pacific and the Sahara desert.
Many of them later developed serious health problems.
France for decades denied its responsibility for fear the admission would weaken its nuclear programme during the Cold War.
But in 2010 it passed a law authorising compensation for military veterans and civilians whose cancer could be attributed to the test programme.
French Polynesia, with a population of about 280,000, is one of three French territories in the Pacific.