The grand Ayatollah said the violence would only prolong the presence of US forces in the country.
His call came as the US military admitted the level of violence was little changed since a large security crackdown in Baghdad last month.
A number of people were killed in fresh violence in the capital and other parts of the country on Thursday.
Correspondents say the Ayatollah's comments were his strongest public statements on the issue of sectarian violence in recent months
"I call on all sons of Iraq... to be aware of the danger threatening their nation's future and stand shoulder to shoulder in confronting it by rejecting hatred and violence," he said.
Ayatollah Sistani said the bombing in February of a Shia shrine in Samarra had unleashed "blind violence".
Unless halted the violence would "harm the unity of the people and block their hopes of liberation and independence for a long time", he said.
The US military on Wednesday again urged the Sunni and Shia communities to root out militias and death squads.
But the US military admitted on Thursday the massive security clampdown that followed the killing of al-Qaeda leader in Iraq Abu Musab al-Zarqawi had achieved only a "slight downtick" in violence.
The security plan included up to 50,000 police and soldiers on the streets of Baghdad and more checkpoints and raids on violent areas.
US Maj Gen William Caldwell said: "We have not witnessed the reduction in violence one would have hoped for in a perfect world."
The US said attacks had risen from an average of 24 a day between 14 June and 13 July to about 34 a day over the past five days.
The threat of sectarian violence has caused an increasing internal refugee problem.
Iraq's migration ministry said more than 30,000 people had registered as refugees this month alone, bringing the total of people seeking help since the Samarra bombing to 162,000.Last Mod: 20 Eylül 2018, 18:16