Speaking in Ankara, Erdogan said Turkey's military rules of engagement changed after Syria shot down a Turkish warplane, The New York Times reported.
"Every military element that approaches the Turkish border from Syria in a manner that constitutes a security risk or danger would be considered as a threat and would be treated as a military target," Erdogan told lawmakers and Arab diplomats.
"From here, we warn the Syrian regime not to make any mistakes, not to test Turkey's decisiveness and wisdom. If there is anyone who could not understand this up until today, we would and will prove in the most clear and determined way that Turkey cannot be challenged."
Erdogan expressed strong support for opponents of Syrian President Bashar Assad.
"We will continue to support the struggle of our Syrian brothers at all costs," the prime minister said. "We will continue to act in solidarity with our brothers until the Syrian people are freed of this cruel dictator," he said.
Meanwhile, NATO's senior governing body Tuesday condemned Syria's downing of the Turkish jet, calling the incident unacceptable at a meeting in Brussels.
The statement by the North Atlantic Council said the episode "is another example of Syrian authorities' disregard for international norms, peace and security, and human life."
NATO Secretary-General Anders Fogh Rasmussen said the council would continue to follow the situation in Syria closely and "with great concern."
"The security of the alliance is indivisible," he said. "We stand together with Turkey in the spirit of strong solidarity."
Turkish media Monday said Syria had fired at a second Turkish plane, which was involved in searching for the location of the downed jet, but it was not hit.
The search-and-rescue plane was looking for the wreckage of the two-seat, twin-engine F-4 Phantom jet Syria shot down over international waters Friday, Turkish Deputy Prime Minister Bulent Arinc said.
The wreckage is 4,265 feet below the surface of the Mediterranean Sea, 13 miles from the Syrian coast, but Turkey has not yet found it or the two pilots, Arinc said.
Syria said the first plane was flying low in Syrian airspace on a route previously used by Israeli warplanes. It says it didn't know the jet belonged to Turkey, its neighbor and former close ally.
Arinc told state-run Turkish Radio and Television Ankara retained its right to retaliate against a "hostile act," but said, "We have no intention of going at war with anyone."
Turkey separately sent a letter to the U.N. Security Council Sunday calling the Syrian action "a serious threat to peace and security in the region."
Turkey shares a 565-mile border with Syria.