Morocco said Tunisia's decision to invite Brahim Ghali to a Japanese development summit for Africa that Tunis is hosting this weekend was "a grave and unprecedented act that deeply hurts the feelings of the Moroccan people".
The row opens a new front in a series of disputes over Western Sahara that has already dragged in Spain and Germany and escalated an overarching regional rivalry between Morocco and Algeria, the Polisario's main backer.
Tunisia has this year grown closer to Algeria, its most populous neighbour and one upon which it relies for energy, with Saied meeting Algerian President Abdelmadjid Tebboune in July.
Tunisia, in response to Morocco's decision, announced it was recalling its ambassador to Rabat for consultation.
Tunisia's ministry of foreign affairs said in a statement early on Saturday that the country maintains its complete "neutrality over Western Sahara issue in compliance with international legitimacy".
It said the African Union had circulated a memorandum inviting all members of the African Union, including the head of the Polisario Front movement, to participate in the activities of the Tokyo International Conference on African Development Summit in Tunisia.
Also, the president of the African Commission extended a direct individual invitation to Brahim Ghali to attend the summit, the statement said.
In a terse foreign ministry statement, Morocco said it would no longer take part in the summit. It also accused Tunisia of having recently "multiplied negative positions" against Morocco, and said its decision to host Ghali "confirms its hostility in a blatant way".
Gaining recognition for its sovereignty over Western Sahara has long been Morocco's most treasured foreign policy goal. In 2020 the United States recognised its sovereignty in return for Morocco's agreeing closer ties with Israel.
Since then, Morocco has taken a tougher stance over Western Sahara, withdrawing its ambassadors to Spain and Germany until they moved closer to its stance on the territory.
Algeria has withdrawn its own ambassador to Spain, a major customer for Algerian gas, after Madrid's sudden shift on Western Sahara.