The Green Brigade fans' group has accused Celtic's board of shaming the club by "attempting to censor and sanction Palestinian solidarity".
Supporters have had their season tickets withdrawn over what the club described as a "serious escalation" in unacceptable behaviour.
It comes after the Green Brigade recently defied pleas by Celtic not to bring Palestinian flags to matches.
The club insist the stadium ban was sparked by a series of incidents.
They include widespread use of pyrotechnics and "violent and intimidating behaviour" towards stewards at an away match.
But the Green Brigade says the "flimsy litany of allegations" have been used to unfairly punish its members - who are already banned from attending Celtic away games.
A statement from the group said: "It is undeniable that the sanctions imposed against those affiliated with the Green Brigade are as a result of the group's unapologetic solidarity with Palestine.
"The sanctions applied, most notably collective bans, are evidently unfair; bereft of policy, process and communications with individuals wrongfully being punished before receiving any allegation, any evidence, nor right of defence."
It adds: "We categorically deny sinister and defamatory allegations of 'breaking in ' and 'intimidating, threatening and abusive behaviour towards staff'."
The Green Brigade, which occupies part of the north curve of Celtic Park, traditionally organise a tifo - a choreographed display involving a large banner or image - for major games.
The group handed out Palestinian flags and held up banners before last Wednesday's Champions League match against Spanish side Atletico Madrid.
The flags were also waved in other parts of the stadium as well as the section occupied by the Green Brigade.
Celtic are widely expected to face a Uefa fine over the flags.
The club has defended its decision to withdraw season tickets from Green Brigade members, with the first match affected by the ban being the Premiership game against St Mirren on Wednesday evening.
It has cited incidents such as:
The widespread and unsafe use of pyrotechnics at Feyenoord on 19 September
Rushing turnstiles and forcing open fire exits at Fir Park, Motherwell, on 30 September
Illegally gained access to Celtic Park in advance of the match against Lazio on 4 October to bring in an unauthorised banner
Violent and intimidating behaviour towards stewards at Easter Road, Edinburgh, on 28 October.
A club statement said: "To avoid any misunderstanding... It is as a result of the increasingly serious escalation in these unacceptable behaviours and non-compliance with applicable regulations that the progressive steps are being taken by the Club."
However, that stance has been challenged by a Celtic shareholders' group, which has called on the club to immediately restore season ticket rights to members of the Green Brigade.
The Celtic Trust says the group has been "singled out and targeted" for its vocal and visual support for Palestinian people in the Israel-Hamas war.
And it says the club's withdrawal of season tickets from 250 fans is "either politically motivated or motivated by an unwillingness to stand up to" European football's governing body Uefa.
A statement from the Trust - which represents individuals and groups of Celtic shareholders - said: " It is abundantly clear to us that this action has been motivated by the flying of Palestinian flags at Celtic Park in protest against the continuing wholesale and indiscriminate slaughter of Palestinian civilians, including over 3,000 children.
"This show of anger and solidarity with the Palestinian people was supported by thousands of Celtic supporters around the stadium and not for the first time. Why then was only one group singled out and targeted?"