Erdogan's comments, his most direct indication yet of a possible cross-border offensive, helped push the lira lower than a basket of emerging market currencies that were already under pressure from a strong dollar.
At 1528 GMT, the lira stood at 5.7220 against the US currency, weakening from a close of 5.6490. The lira had risen in five of the last six trading days, and Tuesday's sell-off set the stage for its sharpest drop since Aug. 20.
A foreign exchange trader who requested anonymity said Erdogan's comments went a step further than in the past.
"While his comments previously said they would try it with the United States first and do it themselves if that failed, today's message was that there was no agreement on this with the United States," he said.
"There was already general selling pressure among EMs against the strengthening dollar but this development pushed the sell-off pressure in the lira and was a factor in pushing the rate over 5.70."