Backed by the Justice Department, the measure would give the attorney general the discretion to block gun sales, licenses or permits to terror suspects.
In a letter this week to Attorney General Alberto Gonzales, NRA executive director Chris Cox said the bill, offered last week by Sen. Frank Lautenberg, D-N.J., "would allow arbitrary denial of Second Amendment rights based on mere 'suspicions' of a terrorist threat."
"As many of our friends in law enforcement have rightly pointed out, the word 'suspect' has no legal meaning, particularly when it comes to denying constitutional liberties," Cox wrote.
In a letter supporting the measure, Acting Assistant Attorney General Richard Hertling said the bill would not automatically prevent a gun sale to a suspected terrorist. In some cases, federal agents may want to let a sale go forward to avoid compromising an ongoing investigation.
Hertling also notes there is a process to challenge denial of a sale.
Current law requires gun dealers to conduct a criminal background check and deny sales if a gun purchaser falls under a specified prohibition, including a felony conviction, domestic abuse conviction or illegal immigration. There is no legal basis to deny a sale if a purchaser is on a terror watch list.
"When I tell people that you can be on a terrorist watch list and still be allowed to buy as many guns as you want, they are shocked," said Paul Helmke, president of the Brady Center to Prevent Gun Violence, which supports Lautenberg's bill.
In the wake of the Virginia Tech shootings, lawmakers are weighing a number of measures to strengthen gun sale laws. The NRA, which usually opposes increased restrictions on firearms, is taking different positions depending on the proposal.
A 2005 study by the Government Accountability Office found that 35 of 44 firearm purchase attempts over a five-month period made by known or suspected terrorists were approved by the federal law enforcement officials.