The People's Liberation Front (JVP) accused the government of capitulating to the rebels and said it would work to overthrow it.
The government lifted a four-year ban on the Tigers on Wednesday in order to facilitate peace talks, due to start in Thailand later this month.
The JVP, which has twice before launched armed insurrections to overthrow the government, said it was in talks with other groups.
Warnings
The JVP's warning came as the main opposition People's Alliance Party said it would hold protests after the government's decision to lift the ban.
Both the JVP and Sinhala nationalists say the government was conceding too much ahead of the talks, due to begin on 16 September in Thailand.
Nearly 5,000 nationalists, led by the JVP and Buddhist monks, staged a peaceful protest march through Colombo on Tuesday.
President Chandrika Kumaratunga has also been critical of moves to lift the ban.
Opposition
A spokesman for her Peoples' Alliance, Sarath Amunugama, said the ban should be lifted only when a political solution was in sight - echoing the president's recently-stated position.
The general secretary of the third largest political party, the Marxist People's Liberation Front, Tilvin Silva, promised mass protests to overthrow the government
The Tamil Tigers are still outlawed in India, Canada, Britain, Australia and the United States.
The United States has said its listing of the Tamil Tigers as terrorists would remain despite the Sri Lankan government lifting the ban.
Britain and India have made similar statements.
The United States declared the LTTE a "foreign terrorist organisation" in October 1997, and curbed the group's fund-raising activities after the 11 September attacks.