Sayed Ahmed Alwadaei confronted MP Bob Stewart outside an event hosted by the Bahraini embassy in London.
The campaigner repeatedly pressed him on his links to the country, asking "did you sell yourself to the Bahraini regime?"
Mr Stewart has apologised for his remarks but said he was "taunted" and had not taken money from Bahrain.
Mr Alwadaei, who is director of advocacy at the Bahrain Institute for Rights and Democracy, challenged Mr Stewart outside an event to mark the National Day of Bahrain last Wednesday.
In a video, provided to the BBC by Mr Alwadaei, Mr Stewart said in response to his questioning: "Get stuffed. Bahrain's a great place. End of."
He later added: "Go away, I hate you. You make a lot of fuss. Go back to Bahrain."
After being asked again if he had accepted any money from the Bahraini regime, Mr Stewart said: "You're taking money off my country, go away!"
The event was also attended by former prime minister Theresa May and Conservative Party chairman Nadhim Zahawi.
Mr Alwadaei, who in 2020 was awarded a prize by the Index On Censorship group for his campaigning, fled Bahrain in 2011 after being arrested for taking part in anti-government protests.
He came to the UK in 2012, where he was granted political asylum and continued to campaign on human rights abuses in Bahrain.
Mr Alwadaei said: "I still have the scars from where the authorities kicked me in the head, and if I went back to Bahrain I would face further torture and imprisonment. My family members are still suffering from reprisals."
He added: "I don't believe I would have been told to 'go back' to the country that violently tortured me if it weren't for the colour of my skin. No-one should be subjected to racial abuse."
Mr Alwadaei said he had also complained to the parliamentary commissioner for standards, Kathryn Stone, and reported the incident to the police. The Metropolitan Police have been approached for comment.
Mr Stewart, a former Army officer who was stationed in Bahrain in the 1960s, said he regretted his remarks.
"The protesters persistently taunted me by saying I had taken money from Bahrain. That deeply offended me. I certainly have not and told them so repeatedly," he said.
"I admit I fell for the taunts and should not have responded which I regret. My comments were meant to tell them they could protest safely in Bahrain... Bahrain gets a very unfair press and I feel that strongly.
"I am sorry if anyone thought I was being racist in any way. Honestly I was not. I wish now I had not been drawn by the taunts (a mistake) but I was and I repeat, I apologise for that. The last thing I meant to be was racist as I have so many good Bahraini friends."
A Conservative Party spokesman said: "We have an established Code of Conduct and formal processes where complaints can be made in confidence. This process is rightly confidential."
Mr Stewart has previously defended Bahrain, telling a Commons debate in January that the country "does not have political prisoners" and "they are all prisoners who are there because they have committed a crime".
The Tory MP has been on two visits to the country paid for by the Bahrain government since last year, according to parliamentary records.
Charities including Amnesty International have accused Bahrain of serious human rights violations, including torture and suppression of freedom of expression.
Protesters took to the streets in 2011 to demand greater rights but the government, backed by Saudi tanks, moved in to crush dissent.
Watch: Video provided by activist Sayed Alwadaei shows his confrontation with Tory MP Bob Stewart