Adama Dieng, the special adviser for the prevention of genocide, warned that the country and the region were facing "a critical moment."
"It is now even more crucial for the authorities and for all relevant parties to recommit to an inclusive national dialogue in the interest of all people of Bahrain," he said in a statement.
Thousands of people protested in the sheikh's hometown of Diraz, west of Manama, after the decision on Monday to strip Sheik Issa Qassem of his nationality.
"I call on the government to ensure that the right to freedom of peaceful assembly is fully respected and that any response to the protests is in accordance with Bahrain's obligations under international human rights law," he said.
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"I also call on the protestors to exercise their rights peacefully and to avoid any act of violence," he said.
Dieng said the nationalities of up to 250 people have been revoked for alleged disloyalty to the kingdom.
He noted a series of other "worrying developments," including the re-arrest of Nabil Rajab, the founder of the Bahrain Human Rights Centre, travel bans on human rights activists, the dissolution of Bahrain's main opposition group, an increase in the sentence of a jailed opposition leader, and the interrogation last week of five Shia clerics.
"For this reason, I call on the Bahraini authorities to seek to de-escalate the situation and on all decision-makers, in Bahrain and at the regional level, as well as on political parties and groups, military, religious, tribal and community leaders to exercise restraint and to take all possible measures to prevent the further increase of tensions," he said.