Humza Yousaf has called on a UKIP MEP to resign after the Scottish government minister was reportedly compared to a convicted terrorist.
In a newspaper interview, David Coburn is alleged to have said: "Humza Yousaf, or as I call him, Abu Hamza".
Mr Yousaf told BBC Scotland the comment was "Islamophobic" and "among the worst racial slurs" he had ever received.
A UKIP spokesman denied the comparison had been made and said it was a "slip of the tongue" on Mr Coburn's part.
Mr Yousaf, Scotland's minister for external affairs and international development, has written to UKIP leader Nigel Farage demanding that Mr Coburn, who is Scotland's only UKIP MEP, is expelled from the party.
Mr Yousaf said he was taking legal advice on the matter.
"I'm the first to tell people to report it, so if potentially a crime has been committed - and as I say, I'm seeking legal advice on that - then of course I will report him to the police.
"If not, then, you know, at least - at the very least - the political party UKIP should certainly be taking disciplinary action against him."
Radical cleric Abu Hamza was sentenced to life in prison for a string of terrorism offences by a judge in New York in January, after being extradited from the UK.
Hamza, who previously lived in London, was jailed in the UK for seven years in 2006 for soliciting murder and inciting racial hatred.
The comments were reportedly made over the telephone to a Daily Mail reporter during a conversation about the BBC Scotland's Big Immigration Debate, which took place earlier this week.
Mr Coburn is reported to have said: "Humza Yousaf, or as I call him, Abu Hamza, didn't seem to turn up."
Speaking to BBC Scotland, Glasgow MSP Mr Yousaf said: "I have had racist and Islamophobic slurs many times over the years, but this is among the worst. For this to come from an elected representative is beyond the pale and completely unacceptable."
He added: "This is an insult to the entire Muslim community, which is fighting Islamophobia in society. It has caused hurt and deep offense. David Coburn should resign, and if he does not, Nigel Farage should remove him from UKIP."
Scotland's main political parties have united in condemning Mr Coburn's reported comments, with First Minister Nicola Sturgeon describing them as "reprehensible".
She added: "For David Coburn to effectively compare Humza to a convicted terrorist because he is Muslim is disgraceful and he must surely face consequences for that."
Scottish Labour leader Jim Murphy said: "This isn't the first time that Mr Coburn has been caught out for having vile views. People across Scotland, including even those who voted for him, will now want to see the back of him."
Ruth Davidson, leader of the Scottish Conservatives tweeted: "Totally unacceptable. Our country is better than this. And he's got form. Mindless idiot."
Meanwhile, Scottish Liberal Democrat leader Willie Rennie called Mr Coburn "an offensive fool".
Mazhar Khan, spokesman for the Muslim Council of Scotland, said: "The stereotyping of Muslims as extremists and terrorists is one the most shameful forms of Islamophobia, and constantly used by right-wing groups such as the BNP and the English/Scottish Defence League to caricature Muslims.
"The fact that UKIP is no stranger to such controversy and has regularly been accused of having racists within its ranks only exacerbates the offence."
Mr Coburn was reported in the Daily Mail as saying he offered his "sincerest apologies" for the comments.
However, UKIP's Scottish chairman, Arthur Misty Thackeray, denied a comparison with Abu Hamza had been made, and said his colleague had made a "slip of the tongue" and "got a name wrong".
He added: "He simply got a name wrong, which many people do on a daily basis.
"For example, I very often get referred to as Minty, which I believe is a character from EastEnders, but I don't take offence at that and run greeting to the papers about Mistyphobia."