Police are investigating after anti-Islam leaflets were put through letterboxes on the lower Ravenhill Road area of Belfast.
They claim to be from a group calling itself 'Generation Sparta', and asks readers to resist what it calls 'Islamisation'.
It is thought the pamphlets were delivered on Monday.
The PSNI are treating the incident as a hate crime.
Ulster Unionist councillor for the area Chris McGimpsey said there were "a significant number of young immigrant families" in the community.
"This behaviour is unwanted and does not reflect the people of the lower Ravenhill Road area," he said.
One woman who received a leaflet said the text was "scary".
"They are obviously trying to rouse people up against people of the Muslim faith," she said.
'Panic in the community'
Ch Insp David Moore said: "We are treating this as a hate incident at present and we are making a number of enquiries.
"The PSNI continues to make it clear that hate crime, in any form, is unacceptable."
Wasif Naeem, from the Belfast Islamic Centre, said the people behind the leaflets were "a tiny minority of people, sitting at home printing these things off, trying to create a sense of panic in the community".
He also said that the circulation of anti-Islam literature was "unfortunately a regular occurrence".
Sinn Féin MLA Mairtín Ó Muilleoir said: "A leaflet circulating across parts of our city is targeting our Muslim citizens for racial hatred.
"It also targets Sinn Féin for our commitment towards a diverse, inclusive and pluralist society.
"Those racist elements behind this anti-Muslim and fascist propaganda intend only to stoke fear, hatred and division amongst the people of our shared city.
"Sinn Féin unequivocally condemns hatred of this kind."
'Masquerading under cover of religion'
DUP MP for South Belfast Emma Little Pengelly and MLA Christopher Stalford jointly condemned the leaflets.
They said: "We have seen attempts before to incite racism within Northern Ireland and thankfully they have failed on every occasion.
It is absolutely wrong and dangerous to try and stir up racist sentiment by conflating an entire religion with the vile, violent acts of terrorists, who are just masquerading under the cover of religion."
They said the leaflets disregarded the wishes of murdered soldier Lee Rigby's family that his death should "not be used to stir up hate or for revenge".
'Fear and tension'
Green Party MLA Clare Bailey said the leaflets were an attempt to "frighten and intimidate families".
She added: "We have already seen homes and cars in the Lower Ravenhill being singled out for attacks in recent months.
"There is clearly a small group of trouble-makers intent on building an atmosphere of fear and tension in the area.
"We would not tolerate such words against any other group in society and it is time for the people of Belfast to rally round and show that this is not who we are in this modern city."