Javad Shamaghdari, from the government-controlled cinema agency, says Iran should "avoid" the Hollywood festival.
The semi-official Mehr news agency today quoted Shamaghdari as urging the committee in charge of selecting Iran's choice to take a step back.
The committee already picked "Yek Habbeh Ghand," or "A Cube of Sugar" - a film about a family wedding turning into a funeral when the groom's relative dies - to run for best foreign film. The government has still to endorse the selection.
Shamaghdari says the Oscars should be boycotted until the organisers denounce the anti-Islam film, which was made in the US and which prompted outrage among Muslims globally.