Graham, speaking from Afghanistan, told CBS' "Face The Nation" on Independence Day that he was "dismayed, angry, upset" at Steele.
"It was an uninformed, unnecessary, unwise, untimely comment," the senator said.
Steele's gaffe, which was made at a fundraiser last week and captured on video, included criticism of the president's policy in Afghanistan: "Well if he's such a student of history, has he not understood that, you know, that's the one thing you don't do is engage in a land war in Afghanistan?"
Today Graham countered with criticism of Steele, saying, "If you're a student of history, you would know that America cannot afford to allow Afghanistan to go back into Taliban control. We're not here fighting a ground war to occupy this country. We're here to help Afghans who can live in peace with us."
Graham's close friend, Sen. John McCain (R-Ariz.), echoed his fellow senator when he told ABC's "This Week" that "I think [Steele's] statements are wildly inaccurate and there's no excuse for them."
But both GOP senators stopped short of demanding Steele's resignation.
"It's up to him to see if he can lead the Republican Party after this comment," Graham said. "I'm going to leave it up to the Republican National Committee. But I do praise him for clarifying the statement."
As rebuffs mounted, Steele issued a statement stressing his support for U.S. troops, but he did not apologize for his factual error on the war.
Anne Kornblut of the Washington Post noted that there's not enough support in the Republican National Committee to vote Steel out, with the by-laws' requirement of a two-thirds majority saving him so far.
"It seems like every time there's a problem for the Democrats, there's some Republican willing to save them by making their own big gaffe," Kornblut said.
Moderator and CBS Political Analyst John Dickerson asked Graham whether he would want Steele to campaign for him and make speeches for Republican candidates.
Graham remarked that Steele, should, at least, not talk about Afghanistan.
"The good news is Michael Steele is backtracking so fast he's going to be in Kabul fighting here pretty soon. I want to let my Republican party know that we need to stand behind President Obama," Grahm said.
"It's not about Michael Steele. It's not about the Republican Party. It's about this country. This is July 4. There are a lot of young men and women spending July 4 in Afghanistan for the second or third time. We all owe it to them to stand behind them.
"This is not President Obama's war. This is America's war."
But Graham, who made headlines by bucking his party and predicting - during a profile in The New York Times Magazine titled "Lindsey Graham, This Year's Maverick" - that the Tea Party movement will "die out," has drawn fire from some of his fellow Republicans for being willing to work with the Obama administration.
Another gap that's widening Graham and other GOP leaders is his fondness for Supreme Court nominee Elena Kagan. The confirmation hearings on Kagan have concluded and some Republican senators are already announcing that they won't vote for her. Senate Judiciary Committee Ranking Member Sen. (R-Ala.) said he was "disappointed" by her.
On the other hand, "I think she's very qualified," Graham said. "She was more candid than most nominees. Overall, I found her to be a very engaging, personable, highly intelligent person."
When asked whether he'll vote for her, Graham said: "I have not made my mind up yet but i think she did a very good job."
Special Report: Elena Kagan
Senate Republican leader (R-Ky.) and two other GOP senators said Friday that they won't be supporting Kagan's confirmation.
"The American people expect a justice who will impartially apply the law, not one who will be a rubberstamp for the Obama administration or any other administration," McConnell said in a statement.
Sen. Lisa Murkowski (R-Alas.) and Sen. (R-Utah), also members of the Senate Judiciary Committee, will oppose Kagan's confirmation as well.