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Te Amorangi Kireka-Whaanga, of Hastings, who heads the Aotearoa Maori Muslim Association, said in a Facebook post yesterday he had changed the organisation's name to the Islamic State of Aotearoa.
Hastings Mayor Lawrence Yule said Mr Kireka-Whaanga's Facebook posts were "very concerning," considering the Islamic State's violent reputation in the Middle East.
"I don't think any normal, law-abiding Kiwi would think there's any time or place for this kind of behaviour. When you have our own citizens setting up a terrorist-style cult within New Zealand, then the agencies on behalf of New Zealanders will do anything they can to stamp them out. I don't think there's any place in New Zealand for these Islamic cults."
Mr Kireka-Whaanga has previously pledged his support for Islamic State on social media, saying it would bring down Western civilisation and true Muslims were behind Islamic State.
In 2010, he was named as one of the world's 500 most influential Muslims, one of two New Zealanders to make the list, by a group in Jordan.
Isis, or Islamic State, has been taking over cities in Syria and Iraq and conducting high-profile beheadings of hostages, as it tries to establish an Islamic caliphate in the region.
Mr Kireka-Whaanga maintains he is "a peace advocate trying to achieve my goal of winning a Nobel peace prize".
Yesterday on Facebook, where he has 936 friends, he called on "Muslim souljahs, warriors and followers of prophet Muhammad" to make their way to Hastings and "blow everyone away with the beauty and magic of love, truth, wisdom and divine blessings".
"Out with the old and in with the new, let's radiate the power of truth the magic of it upon the starving souls of mankind."
He also said "average normal kiwi New Zealanders" had approached him to take action against the Prime Minister, John Key.
In response, a spokeswoman for the Prime Minister said he did not comment on individuals.
A sign put up outside Mr Kireka-Whaanga's house warned media and government employees against setting foot on his property.
His partner yesterday came to the edge of the property and told Hawke's Bay Today he was unavailable for comment.
Hastings residents who live near Mr Kireka-Whaanga's house were unaware of his status as a Muslim leader.
A neighbour said Mr Kireka-Whaanga and his family "keep to themselves".
"They just don't mix. We wouldn't know they even lived there, basically."
Another resident said: "He's obviously kept it under wraps on this street."
A Muslim man who worships at the region's sole mosque, the Hawke's Bay Baitul Mokarram Masjid and Islamic Centre Trust, and did not wish to be named, said Mr Kireka-Whaanga's views did not reflect those of the wider Muslim community.
Known as "Izhaq" to local Muslims, Mr Kireka-Whaanga did not worship at the mosque regularly and it was believed he had "gone mad".
Police declined to comment about Mr Kireka-Whaanga yesterday.
The Herald also interviewed Mr Kireka-Whaanga 10 years ago when he claimed to be regularly visiting prisons, as part of a project to convert inmates to Islam. He is understood to have been since banned from visiting prisons.