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US President Donald Trump would not "land on Greenland and take it by force", Lord Mandelson has said.
The former UK ambassador to the US told the BBC he admired Trump's "directness" in political talks but said he was not a "fool", and advisers would remind him taking Greenland would "spell real danger" for the US national interest.
There has been growing focus during Trump's term on how the semi-autonomous Danish territory is run, with Trump on Saturday saying the US needed to "own" Greenland to stop Russia and China from doing so, and would achieve it "the easy way" or "the hard way".
Denmark and Greenland say the territory is not for sale, with Denmark warning military action would spell the end of the Nato military alliance.
US Secretary of State Marco Rubio will hold talks with Denmark about Greenland next week. The AFP news agency reports that a Danish poll suggests that 38% of Danes think the US will launch an invasion of Greenland under the Trump administration.
Speaking on BBC's Sunday with Laura Kuenssberg programme, Lord Mandelson said: "He's not going to do that [use military action to take Greenland]. I don't know, but I'm offering my best judgement as somebody who's observed him at fairly close quarters."
Sparsely populated, Greenland's location between North America and the Arctic makes it ideally placed for missile early warning systems and for monitoring vessels in the region.
Trump has repeatedly maintained that Greenland is vital to US national security, claiming without evidence that it was "covered with Russian and Chinese ships all over the place". His focus on the territory returned after a commando raid on the Venezuelan capital Caracas last week seized president Nicolas Maduro and his wife and killed dozens of people.
Lord Mandelson, who only lasted a few months as ambassador, also said: "We are all going to have to wake up to the reality that the Arctic needs securing against China and Russia. And if you ask me who is going to lead in that effort to secure, we all know, don't we, that it's going to be the United States."
Meanwhile, the UK is working with Nato allies to bolster security in the Arctic, a senior minister told BBC One's Sunday with Laura Kuenssberg programme.
Transport Secretary Heidi Alexander said discussions about securing the region against Russia and China were part of Nato's usual business rather than a response to the US military threat, and then said the UK agreed with Trump that the Arctic Circle is an increasingly contested part of the world.
"It is really important that we do everything that we can with all of our Nato allies to ensure that we have an effective deterrent in that part of the globe against Putin", she said.
But Conservative leader Kemi Badenoch said the situation in Greenland was a "second order" issue in comparison to what is currently happening in Iran, as protesters there defy a government crackdown.
Questions around sending troops to Greenland were "hypothetical" because "the US has not invaded Greenland," she said.
The US already has significant influence over Greenland. Under existing agreements with Denmark, the US has the power to bring as many troops as it wants to the territory.
But on Saturday, Trump told reporters in Washington that existing agreements were not good enough.
"I love the people of China. I love the people of Russia," Trump said. "But I don't want them as a neighbour in Greenland, not going to happen.
"And by the way, Nato's got to understand that."
Earlier this week Denmark's Nato allies - major European countries as well as Canada - have rallied to its support with statements reaffirming that "only Denmark and Greenland can decide on matters concerning their relations".
A key architect of New Labour, Lord Mandelson has been in and out of British politics for four decades.
He held a number of ministerial roles from the election of Tony Blair - and had to resign from post twice - until Labour lost power in 2010.
