This follows similar comments this week by EPP group leader Manfred Weber.
Verhofstadt's comments on Wednesday come amid a sharp decline in relations between the two sides in recent days, with Tururkish President Recep Tayyip Erdoğan likening the Netherlands to "a banana republic."
Erdoğan has also demanded international organisations impose sanctions on the Netherlands, and accused countries in the west of Islamophobia.
He added, "I have said that I had thought that Nazism was over, but I was wrong."
Speaking in Parliament in Strasbourg, Verhofstadt said, "These comments are ironic, coming from a man who wants to install a totalitarian regime in his country."
He accused Erdoğan of cynicism for advocating freedom of speech while journalists are imprisoned in Turkey.
"He points a finger at our countries, including the Netherlands, but look at what is happening in his own country. It is good that we condemn this but let's freeze the accession talks with Turkey now. To negotiate with someone like this is unacceptable," said the former Belgian Prime Minister.
Manfred Weber, speaking on Monday, said that for Turkey full EU membership "is not foreseeable in the near future."
European Commission President Jean-Claude Juncker also raised the Turkish attacks on the Netherlands saying these were "totally unacceptable" and that those responsible were moving Turkey away from the EU.
Meanwhile, Nato Secretary General Jens Stoltenberg has called for the Netherlands and Turkey to "show mutual respect, to be calm and to have a measured approach, to contribute to de-escalate the tensions."
This comes after Dutch authorities at the weekend prevented Turkish foreign minister Mevlüt Çavuşoğlu from landing in Rotterdam to speak at a rally. In a joint statement, European enlargement Commissioner Johannes Hahn and EU foreign policy chief Federica Mogherini called on Turkey to "refrain from excessive statements and actions that risk further exacerbating the situation."
German Chancellor Angela Merkel offered the Netherlands her "full support and solidarity."
The Dutch foreign ministry has issued a new travel warning to its citizens in Turkey urging them to take care due to the "diplomatic tensions" and warned them to "avoid gatherings and crowded places."