"These measures taken by the Austrian prime minister are, I fear, leading the world towards a war between the cross and the crescent," Erdogan said in a speech in Istanbul.
The crescent is a symbol associated with Islam.
His comments came the day after the Austrian government announced it could expel up to 60 Turkish-funded imams and their families and would shut down seven mosques as part of a crackdown on "political Islam", triggering fury in Ankara.
Interior Minister Herbert Kickl of the far-right Freedom Party (FPOe), the junior partner in Austria's coalition government said the move concerned imams with alleged links to the Turkish-Islamic Cultural Associations (ATIB) organisation, a branch of Turkey's religious affairs agency Diyanet.
Kickl added the government suspects them of contravening a ban on foreign funding of religious office holders.
A Turkish presidential spokesman had on Friday described the Austrian move as "a reflection of the anti-Islam, racist and discriminatory populist wave in this country".
However, other European far-right leaders welcomed the announcement. Even Austria's opposition parties were broadly supportive of Friday's announcement, with the centre-left Social Democrats calling it "the first
sensible thing this government's done".
But the Green Party pointed out it could serve as a propaganda victory for the Turkish government. Erdogan, speaking Saturday, said: "They say they're going to kick our religious men out of Austria. Do you think we will not react if you do such a thing?"
"That means we're going to have to do something," he added without elaborating.
Around 360,000 people of Turkish origin live in Austria, including 117,000 Turkish nationals.
Relations between Ankara and Vienna have been strained since a failed coup against Erdogan in 2016 which was followed by a wave of arrests.
Erdogan's speech comes in the run-up to presidential and legislative elections on June 24th in which he faces stiff opposition.
The Austrian government has banned Turkish officials from holding meetings
in the country ahead of the polls.