The energy spectra of TeV gamma-rays from blazars, after being corrected for intergalatic absorption in the extragalactic background light (EBL), appear unusually hard, a fact that poses challenges to the conventional models of particle acceleration in TeV blazars and/or to the EBL models. In this paper, we show that the internal absorption of gamma-rays caused by interactions with dense narrow-band radiation fields in the vicinity of compact gamma-ray production regions can lead to the formation of gamma-ray spectra of an almost arbitrary hardness. This allows significant relaxation of the current tight constraints on particle acceleration and radiation models, although at the expense of enhanced requirements to the available non-thermal energy budget. The latter, however, is not a critical issue, as long as it can be largely compensated by the Doppler boosting, assuming large (>10) Doppler factors of the relativistically moving gamma-ray production regions. The suggested scenario of formation of hard gamma-ray spectra predicts detectable synchrotron radiation of secondary electron–positron pairs which might require a revision of the current ‘standard paradigm’ of spectral energy distributions of gamma-ray blazars. If the primary gamma-rays are of hadronic origin related to pp or pγ interactions, the ‘internal gamma-ray absorption’ model predicts neutrino fluxes close to the detection threshold of the next generation high-energy neutrino detectors.