The Southeast Asian country is the world's second biggest palm oil producer after Indonesia and would be hit hard by the EU's plan to phase out its use in biofuels by 2030.
European restrictions were "discriminatory" and risked throwing the livelihoods of three million people into disarray, said Mohamed Khairuddin Aman Razali, the Malaysian minister overseeing the industry.
Khairuddin did not say when Malaysia would take its action, which follows a similar WTO lawsuit filed by Indonesia last December.
He added that Malaysia would also be involved as a "third party" in Indonesia's case.
Palm oil is the world's most widely used vegetable oil and a key ingredient in a wide range of products from food to cosmetics. It is also Malaysia's largest agricultural crop.
Environmentalists say it drives deforestation, with huge swathes of Southeast Asian rainforest logged in recent decades to make way for palm plantations.
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