"We will strike the YPG if they do not retreat," Foreign Minister Mevlut Cavusoglu told journalists, referring to the Kurdish People's Protection Units.
The YPG, which Ankara considers a "terrorist" organisation, is backed by Washington as the most effective fighting force on the ground in the battle against IS.
Turkey launched a military campaign inside Syria in August, backing opposition rebels who captured a number of towns from IS jihadists, including Al Bab near the Turkish border.
"We have not yet started our operation in Manbij," Cavusoglu said.
Turkey has also said it wanted to work with its allies to capture IS bastion of Raqa, but has ruled out any operation alongside the Kurdish militia.
"Let's be realistic ... To carry out this (Raqa) operation with YPG is to risk Syria's future," he said.
"We do not want our ally the United States to continue cooperating with terror organisations that target us."
Ankara's offensive is aimed at both cleaning its frontier from IS jihadists and also stopping the advance of Syrian Kurdish militia.
It views YPG and the Kurdish Democratic Union Party as terror groups linked to the outlawed Kurdistan Workers' Party (PKK).
Outlawed as a terrorist organisation by Washington and Brussels, the PKK has waged a bloody insurgency against the Turkish state since 1984.
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