The Peruvian President Kuczynski has called for his Venezuelan counterpart Nicolas Maduro to step down and refused his offer of talks.
Venezuela has rejected Peru's decision to withdraw its Ambassador to Lima and said it is obliged to expel the Peruvian Ambassador to Caracas in response.
The government issued a statement which criticises the move and adds "The President of the Republic of Peru, Pedro Pablo Kuczynski, has become an enemy of Bolivar's homeland by continually interfering in the internal affairs of Venezuela".
Earlier the Peruvian government announced the expulsion of Ambassador, Diego Molero, giving him a maximum of five days to leave the country.
Lima says Caracas had sent an "unacceptable" response following a regional meeting which condemned Venezuela's National Constituent Assembly.
The expulsion has been approved by the Peruvian President Pedro Pablo Kuczynski after Congress voted in favor of the proposal by 75 votes to 9 on Wednesday.
A statement issued by Peru says "The Ministry of Foreign Affairs reports that it has failed to receive the note of protest from the Government of Venezuela on the Lima Declaration, because it contains unacceptable terms."
It continued, "Likewise, it is reported that, having expressed its condemnation to the rupture of the democratic order in Venezuela, the Government of Peru has decided to expel the Ambassador Diego Alfredo Molero Bellavia. He has been granted a maximum term of five days to leave the Peruvian territory. The Peruvian Government reaffirms its firm willingness to continue contributing to the restoration of democracy in Venezuela."
Earlier this week, Peru called a meeting to implement 16 new measures to further isolate the Venezuelan government.
Representatives from 17 countries including Chile, Mexico, Colombia, Argentina, Brazil, Paraguay, Uruguay and Costa Rica, as well as Jamaica and Guyana signed the Declaration of Lima.
The agreement qualifies the Venezuelan President Nicolas Maduro as a "dictator" and rejects the newly-elected Constituent Assembly.
It also refuses to acknowledge any legalislation that does not come from the opposition-controlled National Assembly.
The Venezuelan Minister of Foreign Affairs Jorge Arreaza condemned the move.
Arreaza said the Lima meeting was "an affront to Venezuela's sovereignty and the 8 million people who voted in the Constituent Assembly."
Maduro has called for a new meeting of the Community of Latin American and Caribbean states, CELAC, as well as a summit of regional presidents to restart dialogue.
But Peru's President Kuczynski has urged Maduro to step down and refused his offer of talks.
Speaking in an interview for Reuters Latin American Investment Summit, the Peruvian President said "He's a dictator and has carried out a coup, through a fraudulent election to eliminate Congress."
The comment marked the fiercest criticism yet of Maduro by Kuczynski, a 78-year-old Oxford-and-Princeton trained economist and public administrator.
His standing in Peru's opinion polls has been declining in recent months, dropping from 45 percent in July to 34 percent in August.
Kuczynski's government is battling an increasing number of strikes organized by teachers, medical staff and miners to demand better pay and conditions.