the Fatwa Department Research Committee - chaired by Sheikh `Abd al-Wahhâb al-Turayrî
A hadîth qudsî (a "sacred" hadîth) simply means that the text of the hadîth quotes the words of Allah. It is a term used to classify hadîth on the basis of content, not on the basis of authenticity.
Any hadîth where it is related that the Prophet (Peace be upon him) said: “Allah says…” is classified as a hadîth qudsî.
An example of a hadîth qudsî is where the Prophet (peace be upon him) related to us that Allah says:
I am as My servant thinks of Me. I am with him when he remembers Me. If he mentions Me within himself, I mention him within Myself. If he mentions Me in an assembly, I mention him in a better assembly. If he comes near to Me a handspan, I come near to him the distance of a cubit. If he comes near to Me the distance of a cubit, I come near to him the distance of two outspread arms. If he comes to Me walking, I come to him running. [Sahîh al-Bukhârî (6856) and Sahîh Muslim (4832)]
There are many hadîth qudsî in Sahîh al-Bukhârî and
There are many hadîth qudsî found in the four Sunan books and other collections. These may be classified authentic (sahîh), good (hasan), weak (da`îf), false (bâtil), or fabricated (mawdû’). These terms refer to the authenticity of the hadîth. They are used to describe how well it can be determined that the Prophet (peace be upon him) actually made the statement reported in the hadîth.
The authenticity of each hadîth has to be determined on its own merits, just like any other hadîth.
In order to determine the authenticity of the hadîth, its chain of transmission must be heavily scrutinized. A hadîth will be authentic only if all of its narrators are trustworthy and reliable and only if there is no gap in the chain of transmission. If any of the narrators is unknown, has a bad memory, or gets confused in his narrations, or if there are gaps in the chain of transmission, then the hadîth will be weak (da`îf). If any of the narrators are liars, the hadîth will be considered a fabrication (mawdû`).
And Allah knows best.
Source: Islam Today