Dame Susan Devoy says racism in New Zealand should be ignored "at our peril".
The Race Relations Commissioner was responding to a report from the weekend that an Iranian diplomat gave a fiery, anti-Israeli speech at an Auckland mosque in June, which has just come to light.
Jewish community leaders want Hormoz Ghahremani, first secretary of the Iranian Embassy, to be expelled after he spoke alongside Holocaust-deniers at the mosque.
Mr Ghahremani said in his speech that Israel was trying to "deceive the world" and was fuelling terrorism and extremism in the Middle East to divert attention from the Palestine issue.
A rally was held in Wellington on Saturday, where Green MP Golriz Ghahraman gave a passionate anti-racism speech.
On Tuesday, Dame Susan said "people who deny the Holocaust took place are many things, but most of all, they are liars".
She said Holocaust survivors living in New Zealand were some of the bravest people she had ever met.
"They've seen the very worst of humanity. They've looked evil in the eye and survived anyway. They embody the very best of humanity. They are true Kiwi battlers."
Dame Susan said discrimination against Jews was occurring in New Zealand, citing the example of a pre-schooler who had his yarmulke (skull cap) ripped from his head in Auckland a few years ago, while Jewish cemeteries are regularly vandalised.
"That this happens here makes me incredibly sad, angry and ashamed.
"If we are to learn anything from the Holocaust it is that racism and hatred starts small. But we ignore it at our peril.
"All of us are responsible to ensure we live in a country where hate is never normalised. We can never let our country become one where racism goes unquestioned."