Murdoch, 80, said he was "shocked, appalled and ashamed" at the hacking of the phone of a murdered schoolgirl by his now-shuttered News of the World tabloid.
But he quibbled with a suggestion that criminality had been endemic at the tabloid and said he had seen no evidence that victims of the Sept. 11, 2001 terror attack and their relatives were targeted by any of his papers.
"Endemic is a very hard, a very wide ranging word," Murdoch said. "I also have to be very careful not to prejudice the course of justice that is taking place now."
Murdoch said he was not responsible for the hacking scandal, and denied his company was guilty of willful blindness over hacking.
He laid blame on "the people I trusted but they blame maybe the people that they trusted."
After more than two hours of testimony, a man in a plaid shirt appeared to run toward Murdoch before being struck by his wife Wendi Deng.
Police in the back of the committee room were holding an apparently handcuffed man with white foam covering his face and shirt. The foam also appeared to have hit Murdoch's suit.
The hearing resumed after a short break.
Two of Murdoch's top executives, Rebekah Brooks and Les Hinton, have resigned over the scandal -- something Murdoch said was a matter of regret.
"I've worked with Mr Hinton for 52 years and I would trust him with my life," he said.
Murdoch also told the committee that he didn't believe the FBI had uncovered any evidence of hacking of Sept. 11 victims in a recently launched inquiry.
He said he lost sight of News of the World because it is such a small part of his company and spoke to the editor of the paper only around once a month, talking more with the editor of the Sunday Times in Britain and the Wall Street Journal in the U.S.
The value of the Murdochs' News Corp. added around $1.5 billion while they were being grilled, trading 3.8 percent higher at $15.54. The stock has taken a battering over the past couple of weeks, shedding around 17 percent of its value, or around $8 billion.
James Murdoch apologized for the scandal, telling British lawmakers that "these actions do not live up to the standards our company aspires to."
The younger Murdoch said the company acted as swiftly and transparently as possible. Rupert Murdoch acknowledged, however, that he did not investigate after the Murdochs' former U.K. newspaper chief, Rebekah Brooks, told parliament years ago that the News of the World had paid police officers for information.
Asked by lawmakers why there was no investigation, he said: "I didn't know of it."
He says the News of the World "is less than 1 percent" of his News Corp., which employs 53,000 people.
Murdoch also said he was not informed that his company had paid out big sums -- 700,000 pounds ($1.1 million) in one case -- to settle lawsuits by phone hacking victims.
James Murdoch said his father became aware of the settlement "in 2009 after a newspaper report. It was a confidential settlement."
He said a civil case of that nature and size would be dealt with by the executives in the country involved -- in this case himself, as head of News Corp.'s European and Asian operations.
James Murdoch said news organizations need to put a stronger emphasis on ethics in the wake of the phone-hacking scandal, telling lawmakers that "we do need to think in this country more forcefully and thoughtfully about our journalistic ethics."
Rupert Murdoch's wife Wendi Deng and News Corp. executive Joel Klein, who is overseeing an internal investigation into the wrongdoing, sat behind him as he spoke.
The elder Murdoch denied that the closure of the News of the World was motivated by financial considerations, saying he shut it because of the criminal allegations.
There has been speculation that Murdoch wanted to close the Sunday newspaper in order to merge its operations with the six-days-a-week Sun, which some have speculated will relaunch as a seven-day publication.
Politicians also pushed for details about the Murdochs' ties to Prime Minister David Cameron and other members of the British political establishment.
In a separate hearing, lawmakers questioned London police about reports that officers took bribes from journalists to provide inside information for tabloid scoops and to ask why the force decided to shut down an earlier phone hacking probe after charging only two people.
Detectives reopened the case earlier this year and are looking at a potential 3,700 victims.
The scandal has prompted the resignation and subsequent arrest of Brooks and the resignation of Wall Street Journal publisher Les Hinton, sunk the Murdochs' dream of taking full control of lucrative satellite broadcaster British Sky Broadcasting and raised questions about his control of his global media empire.
Rupert Murdoch is eager to stop the crisis from spreading to the United States, where many of his most lucrative assets -- including the Fox TV network, 20th Century Fox film studio, The Wall Street Journal and the New York Post -- are based.
London's departing police chief revealed that 10 of the 45 press officers in his department used to work for News International, but he denied there are any improper links between the force and Murdoch's media empire.
"I understand that there are 10 members of the (Department of Public Affairs) staff who have worked in News International in the past, in some cases journalists, in some cases undertaking work experience with the organization," Paul Stephenson said.
News International is the British newspaper division of Murdoch's global News Corp.
Stephenson denied wrongdoing, or knowing the News of the World was engaged in phone hacking -- but acknowledged that in retrospect he was embarrassed the force had hired Neil Wallis, a former executive of the paper, as a PR consultant.
After being asked about his relationship with Wallis, who was arrested last week, Stephenson said he had "no reason to connect Wallis with phone hacking" when he was hired for the part-time job in 2009.
He said now that the scale of phone hacking at the paper has emerged, it's "embarrassing" that Wallis worked for the police.
Stephenson announced his resignation Sunday, saying allegations about his contacts with Murdoch's News International were a distraction from his job.
He was followed out the door by assistant commissioner John Yates, who gave evidence before the hotly anticipated appearance by the Murdochs. Yates has denied wrongdoing and said that, with the benefit of hindsight, he would have re-opened an inquiry into electronic eavesdropping of voicemail messages.
London's Metropolitan Police force said Tuesday it had asked a watchdog to investigate its head of public affairs over the scandal -- the fifth senior police official being investigated. The Independent Police Complaints Commission will look at Dick Fedorcio's role in hiring a former News of the World executive as an adviser to the police.
Members of the public and journalists lined up hours ahead of time in hope of a spot in the small committee room, which holds about 40 people. More will be able to watch in an overspill room, and Britain's TV news channels are anticipating high ratings for the appearance.
Murdoch's car was mobbed by photographers as he arrived three hours before the hearing. The Range Rover quickly drove off, returning returned to Parliament about half an hour before the hearing was due to start.
Cameron cut short a visit to Africa and is expected to return to Britain for an emergency session Wednesday of Parliament on the scandal.
A former News of the World reporter, Sean Hoare, who helped blow the whistle on the scandal, was found dead Monday in his home. Police said the death was "unexplained" but is not being treated as suspicious. A post-mortem was being conducted Tuesday. Hoare was in his late forties.
Brooks' spokesman, David Wilson, said police had been handed a bag containing a laptop and papers that belong to her husband, former racehorse trainer Charlie Brooks. Wilson said the bag did not contain anything related to the phone hacking scandal and he expected police to return it soon.
The bag was found dumped in an underground parking lot near the couple's home on Monday, but it was unclear how exactly it got there. Wilson said Tuesday that a friend of Charlie Brooks had meant to drop the bag off, but he would say only he left it in the "wrong place."
In New York, News Corp. appointed commercial lawyer Anthony Grabiner to run its Management and Standards Committee, which will deal with the scandal. But News Corp. board member Thomas Perkins told The Associated Press that the 80-year-old Murdoch has the full support of the company's board of directors, and it was not considering elevating Chief Operating Officer Chase Carey to replace Murdoch as CEO of News Corp.
Britain's Independent Police Complaints Commission also is looking into the phone hacking and police bribery claims, including one that Yates inappropriately helped get a job for the daughter of Wallis. Wallis has been arrested on suspicion of conspiring to intercept communications.
London police also confirmed that they once employed a second former News of the World employee besides Wallis. Alex Marunchak had been employed as a Ukrainian language interpreter with access to highly sensitive police information between 1980 and 2000, the Metropolitan Police said.
The police force said it recognized "that this may cause concern and that some professions may be incompatible with the role of an interpreter," adding that the matter will be looked into.
Meanwhile, Internet hackers took aim at Murdoch late Monday, defacing the sites of his other U.K. tabloid, The Sun, and shutting down website of The Times of London. Visitors to The Sun website were redirected to a page featuring a story saying Murdoch's dead body had been found in his garden.
Internet hacking collective Lulz Security took responsibility for that hacking attack via Twitter, calling it a successful part of "Murdoch Meltdown Monday."
Lulz Security, which has previously claimed hacks on major entertainment companies, FBI partner organizations and the CIA, hinted that more was yet to come, saying "This is only the beginning."
It later took credit for shutting down News International's corporate website. Another hacking collective known as Anonymous claimed the cyberattack on The Times' website.