In an exclusive interview on Wednesday, the PM has said he will raise his concerns when he meets President George Bush at the White House this week.
Turkish leaders have repeatedly warned that expanding Kurdish self-rule in northern Iraq could lead to the country breaking apart and threaten the stability of Iraq's neighbours with their sizeable Kurdish minorities.
"Let me be open and very frank with you," Erdogan said. "Any federal system based on ethnicity is not going to be healthy and will damage the future of Iraq."
"This is the idea that is emerging in countries like Iran and Syria as well."
Point of concern
Kurds are demanding autonomy in northern Iraq within a unified state and are asking for control of the oil-rich city of Kirkuk, a step that Turkish leaders condemn as unacceptable.
Erdogan said that "all resources of Iraq should belong to all people of Iraq." The soft tone contrasts with recent stronger statements by one Turkish general.
Deputy chief of staff General Ilker Basbug warned last Friday that "Iraq's future might be very bloody if there was a federal structure."
The warning comes amid the country's strong desire to repair relations with the United States that have been strained by the Iraq conflict.
Ankara refused to allow in US troops for the Iraq war, alienating itself from its most important ally. But earlier this month, Turkey began allowing the United States use a Turkish air base to rotate troops for Iraq.
"Iraq's future might be very bloody if there was a federal structure."
General Ilker Basbug,
deputy chief of staff
However there is little that Turkey can do to push the United States to moderate Kurdish demands.
Northern Iraq is one of the more stable areas of the country and Washington is keen not to undermine that stability.
US leaders, however, have repeatedly said they would not accept a Kurdish state in northern Iraq, meeting Ankara's key demand.
"Turkey is not in a position to play a strong card in Iraq," said Ilnur Cevik, editor-in-chief of the Turkish Daily News. "Bush needs the Kurds."
Erdogan last visited the White House on 10 December, a little more than a month after his party won a massive majority in Turkish elections.