"No one has a right to engage in slander against Turkey by saying that Turkey is buying oil from Daesh (IS)," Erdogan said in comments broadcast by Turkish television on a visit to Qatar.
He was speaking after the Russian defence ministry claimed Erdogan and his family were involved in the illegal oil trade with IS, raising the stakes in a week-long standoff after Turkey shot down a Russian war plane on the Syrian border.
Erdogan reaffirmed that he would resign if the allegations were proven to be true and appeared to suggest that Russian President Vladimir Putin should also consider his position.
"Turkey has not lost its moral values so as to buy oil from a terrorist organisation," he added.
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The shooting down by Turkish fighter jets of a Russian warplane on the Syrian border on November 24 has plunged relations between Moscow and Ankara into their biggest crisis since the Cold War.
Turkey claims the plane was in its airspace and ignored repeated warnings but Russia insists it never crossed the border from Syria.
"Adding fuel to the fire benefits no one," said Erdogan, who signed a memorandum of understanding on gas supplies from Qatar, Turkey's closest ally.
"We are saddened by the disproportional responses by Russia to an incident in which the whole world agrees we are right."
"If these responses continue we will take our own measures," he said, without elaborating.
But Erdogan also said Turkey had no intention of escalating the crisis and said the two countries still have potential for cooperation.