Mr Trump acknowledged “it could very well be” that Prince Mohammed had knowledge of the Washington Post columnists killing in the Saudi consul in Istanbul.
But in a statement issued by the White House the President indicated he had no intention of cancelling military contracts with Riyadh.
He said: “If we foolishly cancel these contracts, Russia and China would be the enormous beneficiaries.”
Mr Trump said US intelligence agencies were still studying evidence of how Mr Khashoggi was murdered on October 2 and who planned it.
He said: ”Our intelligence agencies continue to assess all information but it could very well be that the Crown Prince had knowledge of this tragic event.
“Maybe he did and maybe he didn’t!”
US intelligence sources said the CIA believed Mr Khashoggi’s death was ordered by Crown Prince Mohammed, who is Saudi Arabia’s de facto ruler.
Politicians on all sides have urged Mr Trump to drop his support for the regime but the President has been reluctant.
He said Saudi Arabia’s King Salman and Crown Prince Mohammed “vigorously deny any knowledge of the planning or execution of the murder” and the truth may never be known.
He also stressed Saudi Arabia was an important business partner and a “great ally” in the fight against Iranian power in the Middle East.
Mr Trump said: “The United States intends to remain a steadfast partner of Saudi Arabia to ensure the interests of our country, Israel and all other partners in the region.”
According to Turkish officials, audio recordings of Mr Khashoggi’s last moments confirm he was strangled to death and dismembered soon after entering the consulate.
And after offering contradictory explanations for his disappearance, Saudi officials finally admitted last week Mr Khashoggi was killed and his body dismembered when “negotiations” to convince him to return to Saudi Arabia failed.
Public prosecutors in Saudi Arabia said it would seek the death penalty for five suspects.
White House sources said US officials, including CIA Director Gina Haspel, had been given access to the recordings although Mr Trump made it clear he does not want to listen to the tapes.
The US President told Fox News Sunday he would not listen to the recording “because it’s a suffering tape, it’s a terrible tape … I don’t want to hear the tape”.
The CIA, relying mainly on circumstantial evidence and expert conclusion, believes Prince Mohammed ordered Mr Khashoggi’s assassination but the oil-rich kingdom’s foreign minister has rejected the claims.
Adel al-Jubeir told Saudi-owned Al Sharq Al Awsat newspaper: “We in the kingdom know that such allegations about the crown prince have no basis in truth and we categorically reject them, whether through leaks or not.
“They are leaks that have not been officially announced, and I have noticed that they are based on an assessment, not conclusive evidence.”
Crown Prince Mohammed still plans to attend a G20 summit in Argentina at the end of the month despite the global outcry caused by Mr Khashoggi’s death.