"I'm still alive. I know that sickening feeling when you bury a colleague", he said, apologising.
The SBU said it had received information about the plot and had managed to prevent it.
But there were signs of a backlash against Ukraine.
The group's secretary-general Christophe Deloire rebuked the actions as well, saying,"This journalist's reappearance is a great relief but it was distressing and regrettable that the Security Service of Ukraine played with the truth".
Ukrainian President Petro Poroshenko congratulated security services on a "brilliant operation" in "saving the life" of Babchenko.
"Law enforcers clearly understood that the news of the murder of Arkady Babchenko would be a pain for thousands of hearts around the world".
Tweet reads: Arkady Babchenko is alive!
However, it turns out that Babchenko was involved in a sting operation with Ukrainian security services meant to uncover an assassination plot against him.
Prominent Russians to have been murdered in Kiev include journalist Pavel Sheremet, who was killed in a vehicle bomb in 2016, and ex-Russian lawmaker Denis Voronenkov, who was shot dead in 2017.
The journalist spoke at a televised press conference in which he apologized to friends and loved ones and thanked Ukraine's security services for saving his life. He said the most important thing was that what he called other big acts of terror had been thwarted.
That citizen was also apparently asked to buy weapons and ammunition.
Babchenko said he was approached by the Ukrainian Security Service a month ago to set up the operation.
Ukrainian authorities said Tuesday Babchenko had been killed at his home by an assailant, leading Moscow and Kiev to blame each other for his death.
Ukrainian police originally claimed Babchenko was repeatedly shot in the back and died in an ambulance on Tuesday. Baburova, who was walking back with the lawyer from the news conference, was also killed as she attempted to help Markelov.
A Russian foreign ministry spokeswoman said that it was happy that Babchenko was alive, calling the staged assassination a "propagandistic effect", BBC reported, citing RIA. He's known for being critical of many of Putin's policies, including the annexation of Crimea.
He contributed to a number of media outlets besides Novaya Gazeta and was an avid blogger, accusing Russian authorities of slaughtering Kremlin critics and unleashing wars in Ukraine, Syria and elsewhere. "I want to say sorry for your suffering", the journalist said.