The DUP has submitted a formal complaint to the Local Government Commissioner over the Sinn Fein head of Fermanagh and Omagh District Council's refusal to condemn the Enniskillen bomb.
Party members on the council have called for the government watchdog which examines the conduct of elected officials to investigate his comments.
It comes after the Ulster Unionists called on Sinn Fein to replace the representative.
Councillor Errol Thompson said the Sinn Fein politician had "failed to understand the hurt caused to innocent victims of terrorism".
He said: "Councillor McCann's words should be examined in the context of both the councillors' code of conduct and declaration against terrorism.
"The chairman's failure to condemn the 1987 Enniskillen bomb and his glorification of convicted IRA terrorist Seamus McElwaine was outrageous and caused hurt to many.
"The chairman is the first citizen and should be marked as being someone who unites rather than divides. Councillor McCann has tarnished the chairman's position.... these remarks represent those in the area who abhor terrorism."
He added: "Councillor McCann has made no attempt to rectify the offence caused. By clinging to office [he] is being arrogant and selfish. He is putting party before office."
Stephen McCann provoked fury when he said he would not "go down the road of condemning" the IRA's Remembrance Day massacre that killed 11 people and left 63 injured in 1987.
In the same interview, McCann praised former IRA terrorist Seamus McElwaine - killed in 1986 by the SAS while preparing to ambush an army patrol in Fermanagh with current Sinn Fein MLA Sean Lynch.
DUP leader Arlene Foster has previously named McElwaine as the man she believed tried to shoot dead her father in 1980.
McCann - chairman of Fermanagh and Omagh District Council - has insisted he will continue to speak "for all", despite a mass walk-out from a council meeting a day after his statements emerged.
DUP councillors Errol Thompson, Keith Elliott, Raymond Farrell, and Paul Robinson earlier said they "refuse to sit under the chairmanship of Sinn Fein's councillor Stephen McCann".