Zakir Naik, a radical television preacher who has called the 9/11 attacks an "inside job", left India in 2016 and moved to Malaysia, where he was granted permanent residency.
Several cabinet ministers have publicly called for Naik to be kicked out, while even Prime Minister Mahathir Mohamad said he had crossed the line.
Malaysian authorities have initiated an investigation against Naik over his intent to provoke a peace breach by allegedly making sensitive remarks on Hindus and Chinese residing in Muslim-majority nation.
Mahathir said the government will first wait for the results of the police investigation into the alleged inflammatory remarks made by him against minorities in Malaysia, reported Malay Mail.
"He (Naik) has PR status. We can take that away if he does something that is detrimental to the well-being of the nation," said Mahathir.
"At this moment, the police are investigating if he is doing that or not. If he is doing it, then it is necessary for us to take away his PR status," he said.
India said it has made a formal request to Malaysia and will continue to pursue his extradition.
(With inputs from agencies)
Malaysian police on Monday questioned Naik for allegedly making insensitive remarks about race in the multi-ethnic country, as pressure mounts on authorities to kick him out.