Bahrain has stripped a leading Shia spiritual leader of his Bahraini nationality following a request from the interior ministry.
The Bahrain News Agency quoted the interior ministry on Monday as saying that Sheikh Isa Qassim had played a key role in creating an "extremist" sectarian atmosphere and working to divide Bahraini society.
After the decision was announced, several hundred Qassim supporters gathered outside his house in the mostly Shia village of Diraz, carrying posters and chanting religious slogans.
Sayed Alwadaei, director of advocacy at the Bahrain Institute for Rights and Democracy, said in a statement that the decision will escalate tensions and may lead to violence.
Hezbollah, the Lebanese Shia group, said the decision would have "grave consequences", while Qassem Soleimani, the commander of Iran's Revolutionary Guards, gave a warning of armed resistance to Bahrain's rulers.
In a statement published by Fars news agency, Soleimani said: "The Al Khalifa [rulers of Bahrain] surely know their aggression against Sheikh Isa Qassim is a red line that crossing it would set Bahrain and the whole region on fire, and it would leave no choice for people but to resort to armed resistance.
"Al Khalifa will definitely pay the price for that and their blood-thirsty regime will be toppled."
However, Saudi Arabia's senior council of religious leaders, who follow a conservative Sunni ideology that is at odds with Iran's Shia leadership, welcomed the actions taken by Bahrain.
A Bahraini interior ministry statement said Qassim had endorsed "the theory of theocracy" and had used his sermons to serve foreign interests, an apparent reference to Iran.
It said Qassim had harmed the supreme interests of the country in doing so.
A broadly worded article of the law in Bahrain allows the government to strip citizens of their nationality if "the person causes harm to the security of the state".
Qassim is the latest Bahraini Shia to lose his nationality in Bahrain. Rights groups say at least five were deported in recent months after having their citizenship stripped.
Recently the country's largest Shia opposition group, Al-Wefaq, was suspended and Sheikh Ali Salman, its secretary general, sentenced to nine years in prison.
Also, last week Bahrain's authorities detained Nabeel Rajab, a rights activist, on charges related to this criticism of the government.
Bahrain has been in turmoil since a 2011 uprising backed by majority Shia Muslims demanding greater rights from the Sunni-led monarchy.
The government crushed the protests with the help of its Sunni Arab Gulf allies suspicious of Iran and opposed to growing Shia influence in the region.
Bahrain hosts the US Navy's 5th Fleet.