The decision by Kura Jarso, the Abbaa Gadaa (ruler) of the Borana community, the main sub-group of the Oromo people who live in the vast territory of southern Ethiopia and northern Kenya, is seen as significant.
OLA rebels consider the area their stronghold.
The Borana are pastoralists and the most influential group amongst the Oromo because of their culture.
The group’s traditional Gada system of governance was listed by Unesco as an “intangible heritage of Ethiopia” in 2016.
The cultural leader’s decision means the group will be considered outcasts from the community where they live and on whose behalf they claim to be fighting for.
“A group that says it’s struggling for the people shouldn’t kill its people. These men are killing Boranas. Thus, they’re enemy of Borana,” the traditional leader told the BBC.
Mr Kura says that as a result, the community will be fighting against the rebel group on all fronts.
The armed group, which broke away from the Oromo Liberation Front, a once-exiled opposition group, is active in western and southern Ethiopia, making the area unstable in recent years.
Last week, Ethiopia’s forces reportedly staged a cross-border raid into the Kenyan town of Moyale, hunting for supporters of the rebel group. At least 10 were arrested.
The group is often accused of attacks including killing, kidnapping and rape which they have denied.
It was accused of killing dozens of civilians in western Ethiopia earlier last month.