"I think now that the world must say: ‘You have been responsible with your cohorts for gross violations, and you are going to face indictment in The Hague unless you step down’," Tutu, a Nobel peace prize winner, told Dutch current affairs TV programme Nova.
Asked if Mugabe, who has been in power since independence from Britain in 1980, should be removed by force, Tutu said: "Yes, by force — if they say to him: step down, and he refuses, they must do so militarily."
"He has destroyed a wonderful country. A country that used to be a bread basket — it has now become a basket case," Tutu said.
Tutu’s comments came on the day Zimbabwe declared a national emergency to halt a cholera outbreak that has killed more than 560 people.
Economic meltdown, which many blame on Mugabe, has left the health service ill-prepared to cope with an epidemic that it once would have prevented or treated easily.
Once hailed as a model African democrat, Mugabe has become increasingly criticised, particularly in the West over a worsening political and economic crisis that critics blame on his policies.
International help for Zimbabwe’s collapsed economy is on hold while Mugabe and opposition leader Morgan Tsvangirai remain deadlocked over implementing a power-sharing arrangement.
Tsvangirai’s Movement for Democratic Change (MDC) party won parliamentary elections while Mugabe was re-elected as president after Tsvangirai pulled out of a two way run-off, citing intimidation by Mugabe supporters.