The veteran BBC presenter said: "Only a moron would 'celebrate' war."
"These occasions, when the Prime Minister escapes from his speech-writers, are hazardous."
David Cameron had promised a "truly national commemoration" to mark 100 years since the outbreak of war in 2014, Armistice Day in 2018, and the dates of major battles in between.
Speaking last year at the Imperial War Museum, the Prime Minister said that he wanted to see "a commemoration that, like the Diamond Jubilee celebrations this year, says something about who we are as a people. Remembrance must be the hallmark of our commemorations''.
But an irate Jeremy Paxman told the Radio Times: "In announcing plans for events to mark the centenary, our Prime Minister promised that the First World War commemoration would be 'like the Diamond Jubilee celebrations'.
"What on earth was he talking about?
"His address also included the cloth-eared ambition to spend lots of public money to make the Imperial War Museum 'even more incredible'. The whole point of the place is its awful credibility."
The broadcaster added: "The commemorations should have almost nothing in common with the Diamond Jubilee, which was an excuse for a knees-up in the rain to celebrate the happy fact that our national identity is expressed through a family rather than some politician who wants the job to gratify his vanity.
"Personally, I think Elizabeth has played a blinder as queen. But her dull and dutiful grandfather, George V, recognised that the person who should be commemorated at the end of the First World War wasn't him, but the Unknown Soldier."
The Newsnight host said that "not to acknowledge the war's significance would be wilful myopia", but that "the whole catastrophe has been overlain with myth and legend".
The presenter, whose great uncle died in the war, said: "A number of distinguished fellow citizens, like the poet laureate Carol Ann Duffy and the thoughtful musician Brian Eno, are worried that the events will turn into a 'celebration' of war. Only a moron would 'celebrate' war."
Mr Paxman added: "We shouldn't 'celebrate' the outbreak of the First World War. But not to recognise that it was one of the most consequential events in our history would just be perverse."
He also criticised the use of TV comedy Blackadder Goes Forth "as a prop in history lessons", adding: "It's great - and moving - comedy. But it's not fact."
The BBC is set to announce how it plans to mark the anniversary.