Eamon Gilmore said Sinn Fein has a "long way to go" before being considered as a potential partner in Government.
Speaking as leader of the Labour party, Gilmore was responding to a suggestion made by Gerry Adams at the Sinn Fein Ard Fheis in Wexford, where he spoke of a future coalition between the country's left wing parties.
While The Tanaiste didn't rule out the possibility, he was critical of Sinn Fein's economic policies, and said the party had many legacy issues to sort out first.
"I think Sinn Féin has a long way to go before anybody can consider them part of a Government," he said.
"In particular, I think their economic policies – if you can call them policies at all – are a bit of a fairytale.
"And I think there are some legacy issues that Sinn Féin have to address - such as, for example, what happened to Jean McConville and to the Disappeared."
Responding to the criticism, Gerry Adams issued a statement through Sinn Féin, saying Gilmore's criticism of economic policy was "a bit rich given the nightmare that Labour’s embrace of austerity and its role in government has created for working people."
"It is also disappointing that Mr Gilmore has once again seized on legacy issues from the conflict to distract attention from the Labour Leadership’s failures."