Karroubi was quoted as saying in a letter to ex-president Akbar Hashemi Rafsanjani that late revolutionary leader Ayatollah Ruhollah Khomeini "prevented (the Guards) from entering into politics and the economy."
But he warned that the decision by the authorities to allow the Guards to enter into both of these spheres was "very dangerous for itself and threatens the nation."
Rafsanjani is an influential cleric who heads the Assembly of Experts that supervises the work of supreme leader Ayatollah Ali Khamenei. He is seen as sympathetic to Iran's opposition.
Since Mahmoud Ahmadinejad became president in 2005, the Guards have expanded their business interests by buying companies and winning contracts in fields ranging from infrastructure and the auto industry to energy and telecoms.
Karroubi also took a swipe at Ahmadinejad, whose 2009 re-election the opposition leader has steadfastly refused to acknowledge.
"Chaos is evident in all of the government's decisions... there is an economic recession, and increase in unemployment," said Karroubi, a former parliamentary speaker.
"The sanctions against us are not due to the resistance of our nation in support for the nuclear programme, but are due to the lack of wisdom, lack of expertise and continuous bragging by the government, especially by the president."
"So if the Assembly of Experts does not do anything in due time, then it will be too late," he wrote without elaborating.
Karroubi along with former prime minister Mir Hossein Mousavi have repeatedly criticised the government over its foreign policy as well as its handling of the economy.
The United Nations slapped Iran with a fourth set of sanctions in June over its defiant uranium enrichment programme, which the international community fears masks a drive to build a nuclear bomb, a charge Tehran denies.
Source: AFP Global Edition