Mrs McAleese claimed the church is in denial when "a very large number of priests are gay".
"I don't like my church's attitude to gay people. I don't like 'love the sinner, hate the sin'. If you are the so-called sinner, who likes to be called that?" she said during a lecture at the Royal Society of Edinburgh.
Her comments have been welcomed by the Irish Association of Catholic Priests, a group known for speaking out against the church establishment.
"Good on her," Redemptorist Fr Tony Flannery told the Irish Independent, adding: "We very much welcome the comments of Mary McAleese in relation to the teachings of the church on homosexuality."
Fr Flannery said he previously got into trouble when he refused to condone the church's teaching on homosexuality.
"She was right in saying that Benedict's comments on homosexuality as something 'disordered' were unhelpful," Fr Flannery added.
"We would also agree that a great number of Catholic priests are in fact homosexual themselves and there should be more openness around the issue of sexuality in the Catholic Church."
During her speech, Mrs McAleese said that homosexuality with regard to Catholicism has long been "not so much the elephant in the room, but a herd of elephants".
She also made reference to the disgraced Scottish Cardinal Keith O'Brien, who was forced to resign last year after admitting that he had homosexual relationships with other priests, despite being a staunch opponent of gay marriage and gay adoption legislation.
Mrs McAleese told the crowd that Mr O'Brien had, like so many closet homosexuals, acted "in the most homophobic way", and should now speak out on behalf of gay people.
"I would have thought Cardinal Keith O'Brien, in telling the story of his life -- if he was willing to do that -- could have been of great assistance to gay people, not just in the church but elsewhere, who felt over many, many years constrained to pretend to be heterosexual while at the same time acting a different life," Mrs McAleese said.
The two-term president also drew comparisons between the church's view of homosexuality and Jews.
Mrs McAleese added that through her studies of suicide among young Irish men, she learned that many of these people were gay Catholics, who had grown up being taught that their sexuality was "intrinsically disordered" and "evil".
She also told the audience of her shock at the response of the Papal Nuncio in Dublin, when she presented him with the research and was asked: "What do you want me to do? Do you want us to turn our back on tradition?" to which she responded, "Yes, if it's wrong".