Warren, said to be the potential Democratic presidential aspirant, accused Trump of using a "racial slur".
"You were here long before any of us were here, although we have a representative in Congress who, they say, was here a long time ago. They call her "Pocahontas"," Trump said during an Oval Office event to honour the native American code talkers.
The three code talkers did not respond to Trump's remarks, but drew sharp reaction from Warren.
"This was supposed to be an event to honour heroes, people who put it all on the line for our country," Warren said.
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The White House Press Secretary Sarah Sanders said Warren's comment was a "ridiculous" response.
"I think what most people find offensive is Senator Warren lying about her heritage to advance her career," Sanders said in response to a question at her daily news conference.