Mr Rosales has long been a vocal critic of President Hugo Chavez
Venezuela has withdrawn its ambassador to Lima in response to Peru's decision to grant political asylum to an opponent of President Hugo Chavez.
The Venezuelan foreign ministry said Peru's decision to grant Manuel Rosales asylum constituted a "mockery of international law".
Mr Rosales ran against Mr Chavez in Venezuela's 2006 presidential election.
He faces corruption charges which he says are baseless and went into hiding when the charges were filed last month.
Venezuela's foreign ministry said in a statement that Peru should have detained and extradited Mr Rosales.
The ministry said Venezuela was evaluating its diplomatic relations with Peru.
Earlier, Peruvian Foreign Minister Jose Garcia Belaunde announced that asylum had been granted to Mr Rosales, who arrived in Lima a week ago.
The decision was part of Peru's long-standing commitment to international law, he said.
The Venezuelan foreign ministry, however, called Peru's move a "mockery of international law, a strong blow to the fight against corruption and an offence to the people of Venezuela".
Peruvian President Alan Garcia is a Washington ally and has clashed with Mr Chavez - a fierce critic of the US - in the past.
Last year Mr Rosales was elected mayor of Venezuela's second biggest city, Maracaibo.
He is facing multi-million-dollar corruption charges relating to a previous term as governor of Zulia state.
Mr Rosales and his supporters say he is the victim of a political witch-hunt
Government supporters accuse him of taking part in a short-lived coup against Mr Chavez in April 2002.
Mr Rosales has insisted that it was an honest mistake made in the confusion that followed the announcement of the president's resignation.