Dutch prime minister Mark Rutte has demanded an apology after Turkey's president compared his country's behaviour to "Nazism".
Recep Tayyip Erdogan threatened to retaliate after two of his ministers were prevented from holding rallies for some of the 400,000 Turks living in the Netherlands.
Mr Erdogan is looking to gain support from them and other Turks in Europe ahead of the 16 April referendum that could give him sweeping new powers, a response to last year's attempted coup .
But the Dutch authorities view the referendum as a step away from democracy and have told Ankara to keep its ministers away.
Turkish family affairs minister Fatma Betul Sayan Kaya was prevented from speaking at a rally in Rotterdam, and The Hague refused to allow a plane carrying foreign minister Mevlut Cavusoglu to land ahead of a planned rally.
Mr Erdogan was speaking at a ceremony in Istanbul on Sunday when he said: "Hey Holland! If you are sacrificing Turkish-Dutch relations for the sake of the elections on Wednesday, you will pay a price."
He had said on Saturday that the Dutch behaviour over the Turkish visits was "Nazism" and "fascism", adding that the Dutch "will pay the price of treating my citizens, my foreign minister... in an impudent way".
And he said the Netherlands was acting like a "banana republic".
Mr Rutte described the "inflammatory remarks" as "unacceptable".
He added: "It is now in the interest of leadership and in the interest of working together to try to de-escalate, but of course the Turks then have to help and what they are saying today is not helping,"
The Netherlands is not the only European country that has called off Turkey's campaigning events - Germany, Austria and Switzerland have also cancelled events.
"The West has clearly shown its true face in the last couple of days," Mr Erdogan said.
"What we have seen in the last days is a clear manifestations of Islamophobia."
After being turned away from the Netherlands, Mr Cavusoglu headed to a rally in France.
Mr Erdogan had praised the French for "not (being) deceived by such games".
Ms Kaya was back in Istanbul on Sunday, where she told reporters that she and her team were "subjected to rude and tough treatment".
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The diplomatic row comes ahead of the Netherlands going to the polls on Wednesday for a parliamentary election, where far-right politician Geert Wilders is expected to make big gains.
Michael Daventry, editor of UK-based Turkish newspaper Haber, told Sky News that Turkey could have postponed their campaigning in the Netherlands until after that country's election.
He said: "The reason they chose not to do that is because Turkish nationalist politics goes down very well with voters in Turkey.
"They're all jumping onto this nationalist bandwagon because they all want to be seen as defending Turkey's interests."
He added: "All of these debates have completely overlooked the fact that the Turkish people are going to be voting next month in a referendum to grant Erdogan sweeping amounts of power and nobody's really talking about that at the moment."