"The plane cannot be refixed," said Nader, whose grandniece was killed in a March crash of a 737 Max jet in Ethiopia. "It has to be recalled" and permanently taken out of service, he said.
Regulators worldwide ordered airlines to ground their 737 Max planes in mid-March after the crash in Ethiopia and one in Indonesia that occurred within five months of one another, killing a total of 346 people. Since then, Boeing has been preparing to get the Max back in the air.
Airlines have canceled thousands of flights due to the grounding and are planning to do so until at least November, a move that Boeing said it took a $4.9 billion charge for in its second quarter.
But the planemaker needs to "take their losses" on the jet, Nader said in an interview with CNBC's "Squawk on the Street."
Crash investigators have pointed to an issue with the jets' software, for which Boeing said it has developed a fix, as the cause behind the two fatal crashes. But once a software upgrade is submitted to the FAA, it will likely take at least another month before the planes are back in operation.
On the software fix, Nader said it shouldn't be trusted since executives are "stuck in their bad decision" and are "ignoring preventable aerodynamic design."
"It's a new plane; they can't say it's just a little bit changed," he said. "It needs full certification."
A spokesman for Boeing on Tuesday, when asked about Nader's comments, said: "Our deepest sympathies are with the families and loved ones of those who died on Ethiopian Airlines Flight 302 and Lion Air Flight 610 and we continue to assist the investigating authorities as they work to complete the accident investigations. Safety is our first priority as we work with global regulators and customers to return the MAX to service."
Nader has been vocal about recalling the 737 Max and the FAA's approval of the jet.
In May, Nader told CNBC that the FAA, which approved the Max two years ago, was beholden to Boeing.
"In all the product defects that I have worked on over the years, I have never seen so many whistleblowers [and] so many authentic aerospace experts condemning the Boeing practice here," Nader told "Squawk Box" in May. "The FAA has been in the pockets of the Boeing company for years — pressured by Congress and the White House on both parties to cut budgets, to cut staff, [and] reduce their talent pool to oversee Boeing."