George Galloway is taking legal action against Willie Frazer over remarks the campaigner for Protestant victims made about him at a loyalist protest outside the Ulster Hall.
In a video widely circulating on social media, Mr Frazer makes a series of allegations about the Respect MP, including his alleged attitude to Muslim jihadists Isis, which last week beheaded US journalist James Foley.
Mr Galloway has in the past strongly condemned Isis and said Mr Foley's beheading filled him with "loathing, disgust and fury".
The MP told the Belfast Telegraph that Mr Frazer's video was now in the hands of his solicitors.
"No one objects to the right to protest or the right to make fair comment. That is part of the rough and tumble of politics," he said.
He added, however, that it was another matter when a "serial protester" makes remarks which "blatantly cross the line".
"My solicitor is dealing with it. Let the law take its course," he added.
The Respect MP has won several high-profile libel actions in the past. He was awarded £150,000 damages when he sued the Daily Telegraph over allegations that he was in the pay of Saddam Hussein.
As Mr Galloway addressed a 1,000-strong crowd in the Ulster Hall on Saturday night, around 200 loyalists waving Union, Israel and English Defence League flags protested outside. Belfast DUP councillor Ruth Patterson took part in the picket.
Loyalists filmed everyone entering the Ulster Hall.
Mr Galloway hailed the event, which was sold out, as a "huge success" and said he was now planning to hold another public meeting in Londonderry's Millennium Forum.
The only heckler in the hall berated him for supporting Irish unity but not Scottish independence. "I don't like to see small islands partitioned," the MP retorted. He repeated his controversial call for a boycott of Israeli goods and services, saying: "Today has been another bloody day in Gaza. Many children were carried out of the rubble minus their heads. A river of blood is flowing in Gaza and we must stop it.
"We must treat Israel the same way as we treated apartheid South Africa. Boycotts do work and this one is costing Israel tens of millions."
Mr Galloway said it was "morally wrong" for Invest NI and Stormont to have funded Caterpillar, the US firm with plants in Belfast and Larne, which makes bulldozers used by the Israeli military to destroy Palestinian homes.
The Respect MP said the turnout in the Ulster Hall for him was testimony to the fact that people were fed up with mainstream politicians.