Malaysia sparked a row with Israel after saying it would not allow Israeli swimmers to compete in a tournament later this year that serves as a qualifying event for the Tokyo 2020 Paralympics.
"Every country has the right to accept or refuse entry of anybody," Mahathir told a press conference in Vienna on Tuesday.
"You can see that in America now they are erecting a very high wall to prevent Mexicans from going to America," he said.
"We have the same idea, that people who are undesirable for our country will be kept out of our country," Mahathir added.
Last week Israel said the decision was motivated by "rabid anti-Semitism" on Mahathir's part.
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Mahathir, now 93 and in his second stint as premier, has in the past attracted criticism for verbal attacks on Jews.
Last week he denied accusations of anti-Semitism, saying: "It is my right to tell them they have been doing a lot of wrong things. Why can't we say anything against Israel, against the Jews?".
On Tuesday he branded Israel "a criminal country", adding: "If their people want to compete in sport, they can go to some other country."
Israel has called on the International Paralympic Committee to challenge the decision or change the venue of the competition.
Kuala Lumpur, which has no formal diplomatic ties with Israel, has rejected pleas from the world sporting body to find a solution to the row.
Malaysia has stopped Israeli athletes from competing in a sports event before. Two Israeli windsurfers had to pull out of a competition on Langkawi island after they were refused visas in 2015.
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