Saudi Arabia has expelling the Canadian ambassador and recalled its envoy after severing business ties with Ottawa over claims of interference in its internal affairs.
The arrests followed a spate of detentions of women's rights activists in the run-up to the end of the ban on women driving in the kingdom in late June.
The Saudi ambassador to Canada has been recalled to the peninsula for "consultation".
"It is quite unfortunate to see the phrase "immediate release" in the Canadian statement, which is a reprehensible and unacceptable use of language between sovereign states".
Saudi Arabia has ordered the Canadian ambassador to leave the country and suspended new trade and investment with Ottawa after Canada's foreign ministry urged Riyadh to release arrested civil rights activists.
"We urge the Saudi authorities to immediately release them and all other peaceful #humanrights activists", tweeted the Canadian embassy.
"The Canadian position is an open and transparent interference in the internal affairs of the Kingdom of Saudi Arabia and contrary to the most basic worldwide norms and all the charters governing relations between countries".
Badawi and another high-profile Saudi women's rights activist, Nassima al-Sadah, were arrested in the kingdom last week, sparking an global outcry.
Badawi's brother was arrested in Saudi Arabia in 2012 and later sentenced to 1,000 lashes and 10 years in jail for criticizing clerics.
The Saudi foreign ministry slammed the Canadian statement, signalling its growing irritation over Western criticism of the kingdom's poor human rights record. More than a dozen women's rights activists have been targeted since May.
It added that Saudi Arabia would freeze all new trade and investment transactions with Canada, and would consider taking further action. The Kingdom of Saudi Arabia expresses its absolute and categorical rejection of the position of the Canadian Government.
Al-Saadah was among the first women to run for office in Saudi Arabia in 2015 as part of a campaign for women's political rights.
Raif Badawi's wife Ensaf Haidar lives in Canada and recently became a Canadian citizen.