Libya rejected the warrants issued for Kadhafi, 69, his son Seif al-Islam, 39, and the head of Libyan intelligence, Abdullah al-Senussi, 62, for atrocities committed in a bloody uprising that began mid-February.
The ruling is a "cover for NATO which is still trying to assassinate Kadhafi," said Justice Minister Mohammed al-Gamudi.
Deputy Foreign Minister Khaled Kaaim said the ICC "functions as a European foreign policy vehicle.
"It is a political court which serves its European pay masters," he said, adding: "Our own courts will deal with any human rights abuses and other crimes committed in the course of conflict in Libya."
But ICC chief prosecutor Luis Moreno-Ocampo said Libya's regime could "be part of the solution" by implementing the arrest warrant.
"Kadhafi's inner circle is the first option. They can complement the arrest warrants," he said at a press conference in The Hague.
"They can be part of the problem and be prosecuted, or they can be part of the solution, working together with the other Libyans to stop the crimes," Moreno-Ocampo said.
And Harold Koh, a top legal adviser to US President Barack Obama, told lawmakers the United States and its allies are not targeting Kadhafi with military strikes.
"The assassination of a head of state is restricted by executive order," Koh told the Senate Foreign Relations Committee.
Koh also said Obama wants congressional authorisation to use force in Libya but does not need it.
"This administration is acting lawfully, consistent with both the letter and spirit of the Constitution and the War Powers Resolution."
Lawmakers of both major US parties have charged that Obama has violated that 1973 law, which aimed to curb US presidents' ability to enter overseas conflicts without permission from Congress.
And some have charged that Obama falls afoul of the Constitution, which makes presidents commanders-in-chief of the military but reserves to Congress the right to declare war.
China urged caution, telling the tribunal to be mindful of efforts to end the conflict in Libya.
"China hopes that the ICC will adopt a prudent, objective and just attitude when assuming its responsibilities to make sure its work will be conducive to peace and stability in the region," foreign ministry spokesman Hong Lei said.
In the latest fighting around the southwestern mountains, the rebels on Tuesday captured a network of bunkers in the desert about 25 kilometres (15 miles) from the hilltown of Zintan, the AFP correspondent said.
The capture of rockets, machine guns and other munitions was a major boost for rebel hopes of driving on to Tripoli from the front line on the other side of the Nafusa mountains, now just 50 kilometres (30 miles) from the capital.
Hundreds of rebel fighters, accompanied by local civilians, combed through the warren of caches, some of which had been blown up in air strikes but with others remaining intact.
The rebel fighters overcame heavy multiple rocket fire from loyalist troops to seize their booty. Rebel commanders said they also ambushed a government convoy, destroying three vehicles.
NATO said warplanes under its command hit three tanks and six armoured personnel carriers in the Zintan area on Monday.
The chief of NATO operation in Libya, Lieutenant General Charles Bouchard, said Tuesday the mission had made "significant" progress but dismissed any scaling back due to rebel advances on the ground.
Germany, meanwhile, said it has offered to supply NATO with bomb components for use in the stretched military alliance's operation.
Moreno-Ocampo sought the three arrest warrants as thousands died in fighting and an estimated 650,000 people fled the country with Kadhafi clinging to power despite NATO strikes easing the siege of key rebel cities.
Gamudi noted his country was not a signatory to the ICC's founding Rome Statute, and "does not accept the jurisdiction of the court."
But the head of Libya's rebel National Transitional Council (NTC), Mustafa Abdel Jalil, told a news conference in the rebel capital of Benghazi that "justice has been done."
In The Hague, rebel justice minister Mohammed al-Allagy told reporters: "We are going to arrest them... We will decide afterwards where to prosecute them."
Bulgaria and Croatia on Tuesday joined a list of countries which have recognised the NTC as the only legitimate representative of the Libyan people, their foreign ministries said.