Biden has apologised to President Recep Tayyip Erdogan for any implication in his remarks at Harvard University on Thursday that Turkey helped foster the growth of Islamic State (IS) jihadists, who have seized swathes of Iraq and Syria.
Yet Biden's comments touched a painful nerve in Turkey, which feels its contribution in hosting some 1.5 million refugees from the Syria conflict has gone unrecognised by the West.
"It is impossible for us to accept this criticism," Davutoglu said to noisy cheers from supporters in Istanbul.
"No one has a right to criticise Turkey and ignore the sacrifices our beloved nation had to make," he added in the televised speech.
Erdogan had reacted angrily to Biden's comments, saying that if "Mr Biden used such language, that would make him a man of the past for me".
A statement from Biden's office released in Washington said the deputy US leader had called Erdogan to "clarify" his remarks.
The controversy is all the more delicate given that Biden knows Erdogan well and has been one of the Turkish leader's main points of contact in Washington over the last years.
Signup to our newsletter and follow us on Facebook and Twitter!
"Our president has already given an appropriate response and as you know, an apology has been made," said Davutoglu.
"If all the warnings that Turkey made had been heeded, these things would not have happened. It is our duty to point this out, no matter who we are dealing with."
A Turkish official told AFP in Ankara that the apology had been "accepted by the Turkish side" and the issue was now considered closed.
Biden had said that while he had a "great relationship" with Erdogan, Turkey had been so determined to oust President Bashar al-Assad that it funded and supplied anyone who would fight the regime, including jihadists.
He had expressed relief that Turkey had finally "woken up" to to threat from Islamic State militants, who are battling for the Syrian town of Kobane just a few kilometres from the Turkish border.
Biden made similar comments about the United Arab Emirates (UAE), prompting Abu Dhabi to describe his remarks as "amazing" given it was playing a prime role in the fight against IS.
Davutoglu, who became prime minister when Erdogan won presidential elections in August, is blamed by many commentators for trapping Turkey in an intractable crisis over Syria because of his over-ambitious policies while foreign minister.