Iyad Madani was addressing an extraordinary meeting of the 57-member OIC, called by Saudi Arabia after protesters in Iran burned its diplomatic missions there in early January.
They attacked Riyadh's embassy in Tehran and a consulate in the second city of Mashhad after the kingdom executed Shiite cleric Nimr al-Nimr, a driving force behind anti-government protests.
The attacks "contradict diplomatic standards", and "interference in the affairs of any member state undermines our organisation's charter," said Madani, referring to criticism by Iran's leaders of Nimr's execution.
"It is clear that the continued deterioration of relations between some of our member states contributes to deepening rifts" among Islamic nations, Madani said.
He said such tensions "distract us from addressing the real challenges", including "terrorism", which threaten members of the organisation that calls itself the collective voice of the Muslim world.
"It is regretful that the reality of the Islamic division and differences negatively affect the performance of the OIC" and its international credibility, Madani told the group based in the Red Sea city of Jeddah.
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Sunni Saudi Arabia and some of its allies cut diplomatic ties with Shiite Iran as a result of the violence against its missions.
Nimr was one of four Shiites put to death on January 2 alongside 43 Sunnis. All were convicted of "terrorism".
The tensions between the leading Sunni and Shiite nations have caused concern around the world.
China, France and Pakistan have also sought a de-escalation.
Madani called for "building bridges of understanding and restoring mutual trust" through dialogue.
This will prevent conflicts "that will waste energy and hinder the development of our people," he said.
Iran sacked a senior security official over his failure to stop the attack on Riyadh's embassy. Iran's supreme leader Ayatollah Ali Khamenei on Wednesday said the attack was wrong and against Islam.