Analysts said the resulting regional tensions could reverse recent moves to restore investor confidence in Bolivia, a landlocked country rich in natural resources but also one of the poorest in Latin America.
Bolivian President Evo Morales said his government would take to the world court its claim for return of territory occupied by Chile if it saw no satisfactory movement on the diplomatic front.
Chile ruled out any further talks on Bolivia's territorial claim if Bolivia took the matter to the court in The Hague, Netherlands.
Morales issued the populist call for a return of a part of the Atacama Desert opening on the Pacific coast during emotional ceremonies that marked the 132nd anniversary of the Day of the Sea, when Bolivia lost the territory to Chilean forces during the 1879–83 War of the Pacific against Chile.
Bolivia has consistently claimed a right to the coast and demanded its return. The loss of access to the sea remains a sore point with Bolivians.
Morales said he would pursue the right with renewed vigor.
"The fight for our maritime claim, which has marked our history for 132 years, now should include another fundamental element: to go before international tribunals and organizations, demanding in lawfulness and fairness a free and sovereign access to the Pacific Ocean," Morales said in comments quoted by the Bolivian news media.
Later officials said the president's remarks referred to the possibility of legal action against Chile in the international court but nothing had been decided yet.
Morales also struck a conciliatory note, declaring his government's pursuit of a claim on the lost sea corridor would be conducted in a non-belligerent manner so as not to jeopardize relations with Chile.
Chile's reaction to the territory claim has been to reject it out of hand and warn that an international campaign will forever bury tentative initiatives taken to look into the Bolivian side of the argument.
Analysts said Bolivia's claim pitted Morales against a difficult choice between carrying on a weak populist campaign, paying the lip service to the idea of restoration of sovereignty to land lost in war, and risking a diplomatic crisis with Chile.
The two countries broke off diplomatic relations in 1978 over the Bolivian claim on the territory. Although more recently ministerial talks on the Bolivian claim were begun but made little progress.
Chilean President Sebastian Pinera warned Morales against taking the world court option.
He said, "Bolivia cannot expect a direct, frank and sincere dialogue while it simultaneously manifests its intention to go to international tribunals."