Palestinian Tourism Minister Khouloud Daibes made the threat in an official letter to her Israeli counterpart, Stas Misezhnikov.
Misezhnikov told Ynet in response that "if the Dead Sea wins the competition, the entire region will prosper, and this will help all the involved countries and entities: Israel, the Palestinians and Jordan.
"The attempt to drag a complicated diplomatic dispute into a competition which is based on honoring the seven wonders of the world does not serve any of the sides. Moreover, intervening in the competition in this manner may lead to the disqualification of the Dead Sea, and we will all be damaged."
The minister added, "It should be noted that 2008 was a record year in incoming tourism to Israel, and affecting the territories as well, which were visited by more than 1 million tourists. If the Dead Sea wins, this trend will grow even more."
In July, the Dead Sea made it to the final list of spectacular natural landmarks competing for a coveted spot on the "New Seven Wonders of Nature" list, along with 27 other sites.
Earlier than month, Palestinian President Mahmoud Abbas signed an agreement allowing the natural phenomenon to be considered for the list, thus removing Palestinian opposition that the Dead Sea be submitted as a joint Israeli, Jordanian, and Palestinian candidate.
Other contenders include the Grand Canyon, the Matterhorn, the Great Barrier Reef, the Amazon rainforest, Mount Kilimanjaro in Africa and Ecuador's Galapagos islands, Azerbaijan's Mud Volcanoes, Lebanon's Jeita Grotto, Ireland's Moher Cliffs and Germany's Black Forest.
The Associated Press contributed to this report