The Persian Gulf country’s interior ministry on Monday confirmed the move leveling baseless accusations against Sheikh Qassem.
The 73-year-old cleric has been a supporter of reforms and peaceful protests in Bahrain.
The Persian Gulf Arab country has been under fire for stepping up its crackdown against opposition leaders.
Lebanon’s Hezbollah resistance movement condemned the ruling Al Khalifah regime for stripping the nationality of Sheikh Qassem, saying the decision would push the Bahraini people to difficult choices with severe consequence for the regime.
Bahraini authorities have launched a wide-ranging campaign against Shia Muslims and any activist or society it has accused of breaking the law.
Last Tuesday, a court suspended Al Wefaq, Bahrain’s main opposition group, closed down its offices, suspended its activities and froze its assets.
Manama also dissolved two other opposition groups, namely al-Tawiya and al-Risala Islamic associations.
In another development on Thursday, a Bahraini criminal court sentenced eight Shia nationals to 15 years in prison each and stripped the defendants of their citizenship.
According to a judicial source, the eight were accused of forming a "terror” group in 2014, possessing arms and attempting to kill policemen in the Bahraini village of Nuwaidrat.
Two other defendants were also handed down jail terms of three years each for participating in an unauthorized demonstration in the same village in June 2014.
Since mid-February 2011, Bahrain, a close ally of the US in the Persian Gulf region, has been witnessing almost daily protests demanding that the ruling family relinquish power.
The Al Khalifah regime is engaged in a harsh crackdown on dissent and widespread discrimination against the country's Shia majority. Scores of people have been killed and hundreds of others injured or arrested in the island country.