An official statement issued "categorically rejected" the South Transition Council.
An official statement issued after President Abedrabbo Mansour Hadi met his advisors in the Saudi capital "categorically rejected" the South Transition Council whose 26 members include the governors of five southern provinces and two government ministers.
The body was announced on Thursday by Aidarous al-Zoubeidi, the recently fired governor of the southern province of Aden.
"Such acts remain baseless and will never be accepted," the presidency statement said, adding that the move only served the Huthi rebels who have been fighting Hadi's internationally recognised government for more than two years.
It urged those listed as council members "to declare a clear position" towards the new body.
Hadi, a southerner, has been based in Riyadh since March 2015, when the Shiite Huthis closed in on his refuge in Aden after seizing the capital Sanaa and other areas.
Although government forces backed by a Saudi-led coalition have recaptured five southern provinces, including Aden, Hadi has only returned to the port city for short visits as the grip of his security forces remains weak.
South Yemen was an independent state until 1990, when it was unified with North Yemen.
Four years later, it launched a separatist rebellion which culminated in its occupation by northern forces.
The Huthis also rejected the new council, which spokesman Mohammed Abdulsalam slammed as a "threat to the territorial unity of the Yemeni republic," and a part of a "colonial plot".
Hadi sacked Zoubeidi on April 27 along with cabinet minister Hani bin Breik, in a move widely seen as reflecting divisions among his supporters.
The two men, who played key roles in restoring security to Aden and adjacent provinces after rebels were pushed out in 2015, are believed to be close to southern independence activists.
Thousands of southern Yemenis responded to the sackings by demonstrating in Aden, Hadi's hometown where his government is based, and urged Zoubeidi to set up a new leadership body to represent the south.