Saudi Arabia should be held responsible for militant financing and crimes committed by insurgent groups in Iraq, the Baghdad government charged on Tuesday.
Comments from Riyadh indicates it is "siding with terrorism", the cabinet said in a statement issued by Prime Minister Nuri al-Maliki's office.
"We strongly condemn this stance," the statement read.
"We hold it (Saudi Arabia) responsible for what these groups are receiving in terms of financial and moral support."
It continued: "The Saudi government should be held responsible for the dangerous crimes committed by these terrorist groups."
The statement came just days after Saudi Arabia and Qatar blamed "sectarian" policies by Iraq's Shiite-led government against the Sunni Arab minority for the unrest that has swept the country.
The unrest "could not have taken place if it was not for the sectarian and exclusionary policies implemented in Iraq over the past years that threatened its stability and sovereignty," the Saudi government said in a statement.
In March, Maliki accused both Saudi Arabia and Qatar of supporting terrorism in Iraq.