Speaking at the National Conservatism Conference here, Thiel who is a high-profile supporter of US President Donald Trump, said the tech giant has been "thoroughly infiltrated" by Chinese spies, reports Axios.
Google faced the flak last year for its plans to build a censored search engine called "Dragonfly" for China. After internal protests and political pressure, the company put the plan on hold.
Thiel asked three questions to Google.
"Number one, how many foreign intelligence agencies have infiltrated your Manhattan Project for AI?
"Number two, does Google's senior management consider itself to have been thoroughly infiltrated by Chinese intelligence?
"Number three, is it because they consider themselves to be so thoroughly infiltrated that they have engaged in the seemingly treasonous decision to work with the Chinese military and not with the US military."
Thiel who co-founded PayPal, then said FBI and CIA must ask these questions to Google.
Google denied Thiel's allegation of links to China.
"As we have said before, we do not work with the Chinese military," a Google spokesperson was quoted as saying.
Trump accused Google of "helping China and their military" in March. The company had then denied the allegation, saying it was "working with the US government".
Top Pentagon officials have also slammed Google, saying its work with China is "indirectly benefiting" the military in that country.
"The work that Google is doing in China is indirectly benefiting the Chinese military," General Joseph Dunford, Chairman of the Joint Chiefs of Staff, told the Senate Armed Services Committee in March.
"We watch with great concern when industry partners work in China knowing there is that indirect benefit," Dunford said.
Google has also decided not to go ahead with "Project Maven" with the US Department of Defense that uses Artificial Intelligence (AI) warfare drone system.
Google CEO Sundar Pichai has emphasised that the company will not work on technologies that cause or are likely to cause overall harm.
( With inputs from IANS )