Overqualified Question:

If you are overqualified for the position then you're going to need to address the issue. There are a number of reasons why you would be considering a job for which you are theoretically overqualified - not least a challenging economic climate with high unemployment and a scarcity of jobs. Regardless of what your actual reasons are, you need to deliver a very convincing explanation to the interviewer if your application is to survive this question.
Naturally, if you don't feel you're overqualified then do query this with the interviewer. If they can tell you why they think you're overqualified then it will help you to counter their objections. But perhaps you have simply misunderstood what the role entails and this vacancy isn't appropriate for you?