The Saudi ambassador to Canada has been recalled to the peninsula for "consultation".
"Any other attempt to interfere with our internal affairs from Canada, means that we are allowed to interfere in Canada's internal affairs".
Saudi Arabia said it considers the Canadian ambassador in Saudi Arabia as persona non grata and gave him a 24-hour notice to leave the kingdom.
On Friday, Canada said it was "gravely concerned" about the arrests of civil society and women's rights activists in Saudi Arabia, including Badawi, the sister of jailed dissident blogger Raif Badawi.
Last week, the Canadian government publicly took the Saudis to task after the kingdom arrested two women's-rights activists, the latest to be swept up in a government crackdown on activists, clerics and journalists.
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Most of those arrested campaigned for the right to drive and an end to the country's male guardianship system, which requires women to obtain the consent of a male relative for major decisions. Some have since been released.
Canadian foreign ministry officials were not available for an immediate comment on Sunday.
In its statement on Sunday, the Saudi foreign ministry suggested that the Canadian foreign ministry's demand was tantamount to interference in Riyadh's affairs and warned that any further action would be seen as a license to meddle in Canadian affairs. Many others are banned from traveling outside the kingdom.
In April, Canadian Prime Minister Justin Trudeau expressed his "serious concern" over the continued jailing of Badawi to Saudi King Salman.
The Canadian envoy in Riyadh is no longer welcome.
"Canada is easier to cut ties with than the rest", Bessma Momani, a professor at Canada's University of Waterloo, told AFP. "At jeopardy, are the tens of thousands of Saudi students in Canada".