Police are continuing investigations into anti-Islamic posters put on Queenstown's new Islamic Centre.
The mosque opened two weeks ago after the community raised thousands for a deposit towards buying the building it is in.
Southern District Commander Superintendent Paul Basham said police were working with the mosque and were taking the matter very seriously.
Queenstown Mayor Jim Boult said the act was appalling and there was no room for hate speech in Queenstown.
"I was informed about it by a member of the public yesterday and my reaction was one of horror and disappointment.
"We immediately sent out council staff to get rid of the material and we are doing everything we can as a council to assist the police," Boult said.
There was no room in the community for these actions, he said.
"I was delighted when the mosque opened, we have a very strong Muslim community here and we have a very inclusive community.
"We have something like 47 different nationalities in our high school so these actions are completely foreign to us."
Boult is meeting with the Muslim community today.
"It was a prearranged meeting to chat about general matters but obviously this is going to be agenda item one.
"To the Muslim community I really want to express my apology on behalf of the entire community and I want to assure them that they are welcome in this part of the world."
He said to the person or people who put the posters up if they did not like it in Queenstown they could leave.
Mosque asks perpetrator for conversation
The Queenstown Masjid did not want to discuss the incident while police were investigating.
Imam of the Southland Mosque Reza Abdul-Jabbar said Queenstown was a melting pot of cultures so the local masjid had been left a little shaken by the incident.
"It's sad given everything that's happened, the Royal Commission and inquiries that have taken place that things like this are still taking place," Abdul-Jabbar said.
"I thought coming to the end of the year that this sort of carrying on would have stopped by now, honestly."
He said Muslims understood that incidents like this could come from misunderstanding, not hate, and offered to meet with those responsible for the posters.
"I think a cup of tea or coffee or a meal is the way that we would like to invite you for a conversation so we can address your issues and whatever queries or questions you may have.
"We would love to speak to you face to face, we don't hate you because we know the only reason you have done what you have done is because you don't know what the real teachings of Islam are."