The Nahdlatul Ulama identified elements within the Islamic world as being "the most significant factor causing the spread of religious extremism among Muslims."
The group, which was founded in southeast Asia in 1926 and boasts tens of millions of followers, also accused un-named Middle Eastern governments of deliberately nurturing religious extremism by exploiting sectarian differences.
"By 'weaponizing' sectarian differences, these governments have sought to exercise both soft and hard power, and exported their conflict to the entire world," the group announced.
It was a thinly veiled denunciation of Saudi Arabia and Iran -- rival Sunni and Shia Muslim states -- and their support for groups battling each other in Syria and Yemen.
The Nahdlatul Ulama announcement came after the group hosted an international, two-day meeting of moderate Islamic leaders in the Indonesian capital.
Some counter-terrorism experts applauded Nahdlatul Ulama's denunciation of religious intolerance within the Islamic world.
"They're not afraid to connect Islam and terrorism," said Magnus Ranstorp, an analyst with the Swedish Defense University who attended the conference in Jakarta.
"I don't see any other Muslim leaders standing like a tower and saying we are prepared to take this on," he added.
Nahdlatul Ulama religious scholars say they are using Islamic law to challenge the arguments extremist groups such as ISIS and al Qaeda have used to legitimize their campaigns of violence.
The initiative appears to have the support of the Indonesian government.
Vice President Mohammed Jusuf Kalla spoke at the opening of the two-day conference, saying he hoped religious leaders could help "straighten" the extremist ideology that has taken root in some Muslim communities.
In their statement, Indonesian scholars also identified poverty and political injustice as contributing factors to religious terrorism, which they said in turn contributes to the rise of Islamophobia in Western societies.