Sheikh Shady Alsuleiman is one of three Australian Muslim figures singled out in the IS video for discouraging violence and encouraging youths to follow local laws.
Sheikh Shady, who works with young Muslims, said he “will not be deterred” by the threat against him.
In the graphic 25-minute video, which has since been removed from YouTube, a bearded man encourages followers to murder Muslim leaders opposed to IS, calling them "apostates".
“My message has always been the same and will continue to be the same,” he told SBS.
“I will not turn away from what I have been calling for.
“I do say, and continue to say, that ISIS is a deviant cult. They do not represent mainstream Islam,” Sheik Shady said.
“I have always spoken against ISIS,” he said, adding that he would continue in his mission to “teach and practice the true Islamic teachings”.
Professor in Global Islamic Politics at Deakin University Greg Barton said the latest IS video is part of the terror group’s strategy to encourage lone-wolf or smaller scale terror attacks.
"Singling out individuals and trying to crowd source people who have come forward and attempted an attack is exactly what Islamic State is good at, so I think we can expect in 2017 we will see a lot more attempts in this direction."
For his part, Sheikh Shady is confident law enforcement agencies will keep him safe. However, he said he may have to take more precautions in his daily life.
