The One Nation leader has come under fire for saying there were "no good Muslims" and people felt unsafe in places with large Islamic populations, such as Lakemba in western Sydney.
Canterbury-Bankstown mayor Bilal El-Hayek, who represents Lakemba, said the senator should be charged under hate speech laws.
"When you look at the hate speech laws, they're quite clear," he told ABC Radio on Friday.
"There is a specific reference made of pubic incitement of hated, discrimination or violence against particular groups based on race, religion or gender.
"Clearly, her latest target was Muslim people and I have no doubt that her remarks will incite someone."
Liberal leader Angus Taylor distanced himself from Senator Hanson's anti-Muslim comments but did not say whether he supported potential charges.
"I'm not into law enforcement. What I'll say is I don't agree with Pauline Hanson and what she said," he told reporters in Melbourne.
"What I believe is that people who don't adopt or believe in our core values shouldn't come to our shores."
Mr Taylor said it was up to Senator Hanson to apologise for her remarks, which have been condemned by Labor and the coalition.
One Nation has been outperforming the coalition in recent opinion polls.
It comes as members of Sydney's Muslim community say Senator Hanson should put her offensive views aside and meet them to share a meal.
Up to a million visitors are expected to show up at a popular night market in Lakemba in southwestern Sydney for the month of Ramadan, where dozens of stalls serve everything from camel burgers to sugarcane juice.
But the first day of the holy month was tinged with sadness and frustration after a threatening letter was sent to Lakemba Mosque - the third it has received in a month.
Born and bred in Lakemba, construction worker Mohammed - who asked that his full name not be used - extended an invite to the controversial politician.
"We want Pauline Hanson to come down here, break our fast and eat with us and see how we are," he told AAP on the steps of the mosque with his young son in tow.
"It's a multicultural place ... come in and we'll show you around."
The 35-year-old noted the threats would not deter him from going to pray and seeking spiritual solace in the next few weeks, when Muslims globally fast from sunrise to sunset.
"Those who made a threat, we can help them and guide them. It's not going to (stop us coming) to the mosque anymore or scare us."
Sharing in a communal breaking of the fast at the mosque after a long hot day, Mahadi Hasan said he felt at home in the suburb observing his first Ramadan away from his family in Bangladesh.
"I came to Australia because it's one of the most peaceful countries in the world and we Muslims also love peace," he said.
The 24-year-old student said he was "very concerned" with the rising rhetoric targeting Muslims in Australia, including the latest threat to the Lakemba Mosque.
Featuring a cartoon pig, the letter made calls to kill or deport Muslims and referenced an Australian convicted terrorist who killed 51 Muslims in Christchurch in 2019.
The unsigned letter delivered to the mosque also contained a direct death threat levelled against Josh Lees, the prominent organiser of the Palestine Action Group, with the words "Praise Israel" atop.
Mr Lees said politicians had fanned the flames of Islamophobia by denigrating supporters of the Palestinian cause, against a backdrop of more than 70,000 people being killed in Gaza over the past two years.
Prime Minister Anthony Albanese said it was outrageous the Muslim community was being subjected to intimidation.
Mr Taylor's office has not responded to a request for comment about the violent threats sent to Lakemba mosque.
