Glasgow, Scotland - Speaking at a summit on the issue in Glasgow, Cardinal Keith O'Brien said too much focus has been put on football and parades.
He claimed scant attention was paid to targeting the biases that impede Catholics in day-to-day life and social problems which contribute to bigotry.
His criticisms were backed by representatives on both sides of the religious divide, as well as campaigners - who stressed that little had been done to eliminate sectarianism at the "boardroom level".
Cardinal O'Brien said: "Enormous attention has been given to football, parades and marches and much progress has been made in these areas. But most instances of sectarianism do not involve any of these and I think we should now begin to look at the wider social causes of sectarian animosity."
He said poverty, unemployment, poor housing and young people with "nothing to do" were all contributing to the problem
A spokesman for the Catholic Church later said that the "acceptance of anti-Catholicism" remained common in Scotland.
He added: "The cardinal certainly does not think that the Executive is actively anti-Catholic. But we still live with the stereotypes and preconceptions."
Jim Slaven, national co-ordinator of republican group Cairde na hEireann, agreed that measures were required to eliminate institutional sectarianism he claimed was keeping Catholics from the highest levels of public life.
He added: "A lot still needs to be done. Why as a Catholic are you almost twice as likely to end up in jail?
"There is a perception that Catholics don't get a fair crack of the whip in the justice system and when you look at health and education statistics Catholics suffer in Scotland."
Dr Joe Bradley, an authority on religious identity in Scottish society, pointed out that a "disproportionate number" of Catholics were still living "impoverished and deprived lives".
A spokesman for Nil by Mouth, the anti-sectarian charity, said: "Sectarianism isn't just about deprivation, football and parades - it can be found at the boardroom level as well.
"The Executive deserves credit but we really need to build on progress and make the most of this opportunity to bring about a cultural shift with serious resources behind it."
Robert McLean, executive officer of the Grand Orange Lodge of Scotland, said that creating more employment and improving living standards would help.
The comments came as Jack McConnell, the First Minister, revealed that a new body - Football for All - is to be set up to tackle sectarianism in football, with the backing of the SFA.
A disciplinary offence of unacceptable conduct in football grounds in Scotland is to be created - with clubs potentially docked points if their fans engage in sectarian behaviour.
Mr McConnell accepted there was "still more to do", adding: "Today's strategy is about shaping attitudes, [and ]developing a culture in which sectarianism simply has no place."
RELIGIOUS DIFFERENCES
• There are about 803,000 Catholics in Scotland - or almost 16 per cent of the country's population, according to the 2001 census.
• Around 43 per cent live in either Glasgow or Lanarkshire.
• A total of 39 per cent of adult Catholics have no educational qualifications, compared to 33 per cent of Scots overall.
• The 65 per cent employment rate for Catholics is lower than for people affiliated with the Kirk (72 per cent) and the overall population (70 per cent)
• Catholics are less likely to own their own home (62 per cent ) compared to the general population (67 per cent).
• Only 25 per cent of Catholic men are employed in managerial roles - compared to 29 per cent of the overall population.
• Catholics are less likely to describe their health as "good or fairly good" - with 87.8 per cent of men and 86.2 per cent of women agreeing. That compares to 90.6 per cent of Scottish men overall and 89.2 per cent of women.
• About 25 per cent of Scotland's prison population is Catholic - a disproportionate total.
• A Crown Office study of 532 religious aggravated crimes recorded between January 2004 and June 2005 found that derogatory conduct towards Catholics made up 64 per cent of cases - with Protestants being victimised in 31 per cent.
• A report in 2004 found that half of Catholics living in Scotland believed their religion made a difference to how they were treated.