The International Union of Muslim Scholars (IUMS) said it would pursue legal action in Europe and the United States, claiming its reputation had been harmed due to the listing by Saudi Arabia, the UAE, Egypt and Bahrain.
The four Arab states are locked in a political feud with Qatar, now in its six months, over allegations Doha supports Islamist extremism and is too close to Saudi arch-rival Iran.
Qatar denies the allegations, but the deep-rooted crisis has threatened to destabilise the Gulf.
"There will be a legal request to the responsible authorities in America and Europe to file legal claims to restore and compensate for the harm they caused us because they damaged our reputation," IUMS secretary general Ali al-Qaradaghi said, referring to the four Arab countries boycotting Qatar.
Speaking after a press conference on Friday, he added the organisation would "not stay silent" and that the terror list was not recognised by the United Nations.
Saudi Arabia and its allies in the Qatar boycott placed IUMS on a "terrorism" list late last month, saying the organisation promoted "terrorism by using Islamic rhetoric as a cover to facilitate terrorist activities".
Ali al-Qaradaghi, Secretary-General of the International Union for Muslim Scholars (IUMS), speaks during a press conference in Doha on Friday.
A leading Qatar-based Muslim organisation placed on a "terrorism list" by Saudi Arabia and its allies said on Friday it would take legal action to clear its name.
