Grand Chief Derek Nepinak of the Assembly of Manitoba Chiefs is also demanding a full public apology to First Nations.
Braydon Mazurkiewich was ousted as Tory youth leader last week after posting what he admitted was a racist comment on his Facebook page.
He said he was upset about a planned urban reserve in Winnipeg on a former defence base designed for the "hard-working men and women of the military, not free-loading Indians.''
Nepinak says in a letter to Tory Leader Brian Pallister that Mazurkiewich's ouster was nothing more than political correctness.
"I have instructed my staff to cancel a meeting scheduled tomorrow with you and your office," Nepinak says in his letter dated Dec. 17.
"This gesture ... is not intended to paint the entirety of the Progressive Conservative party with one brush, but rather to put your party on notice that a full public apology is expected to First Nation citizens of Manitoba."
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"This continued and wilful dissemination of falsehoods and ignorance is but one example of a long list of contributing factors that prevents many of us from being good neighbours in this city and this province."
The chief is offering to sit down with Pallister and his caucus to discuss ways to overcome "misinformation" about aboriginal people.
Mazurkiewich apologized for his comment and handed in his resignation Dec. 14 after he was asked by the party to step down. But he maintained his opposition to the reserve in suburban Winnipeg.
"I don't think that would fit well in that community at all. You know, you hear on reserves all the time, people are burning down their own homes. There are shootings and stabbings, and we don't need to bring more of that to Winnipeg," he said.
Nepinak initially applauded the Tories for taking swift action and he called Mazurkiewich uninformed.
"I feel sorry for this young person ... and hopefully they get the help they need to overcome their misunderstandings," the grand chief said last Friday.
The urban reserve planned for the Kapyong Barracks site is intended to be a mix of residential and commercial development to create jobs for First Nations who are still owed land from Treaty One which was signed in 1871.