A panel of senior judges suggested Yousuf Raza Gilani was not an honest man and had violated his oath.
Relations between Pakistan’s civilian government and the judiciary are tense.
In 2009 the Supreme Court overturned an amnesty protecting President Zardari and hundreds of other politicians from being prosecuted for corruption.
Critics of the amnesty say it is illegal to help so many politicians and officials to escape prosecution for alleged wrongdoing.
The Supreme Court said the government had failed to implement its ruling.
“The government is not taking interest to observe the order for the last two years,” it said. “The court has taken an oath to defend the constitution. The prime minister respected the party over the constitution.
“Prima facie… he may not be an honest person on account of his not being honest to the oath of his office.”
Many in Pakistan feel the pressure on President Zardari’s government could leave him with no choice in the end but to call an early election, our correspondent says.
The next general election is due by early 2013. Mr Zardari’s term runs out later that year