In Ramallah in the West Bank, the Palestinian football association issued a statement thanking Argentine striker Lionel Messi and his colleagues for the cancellation.
A senior source at Argentina's Football Federation, who was speaking on condition of anonymity, told The Associated Press on Tuesday that the game had been called off.
Reports said Israeli Prime Minister Benjamin Netanyahu had earlier called Argentinean President Mauricio Macri to ask him to persuade the team not to suspend the event.
Although the stadium that was slated to host the match is in west Jerusalem, Rajoub had complained that it is situated in a neighborhood built on the site of a former Palestinian village destroyed during the war surrounding Israel's independence 70 years ago.
"He led the Argentine national team to the gold medal at the 2008 Beijing Olympic Games and brought them victory at the FIFA Under-20 World Cup in 2005".
"But that's the way it is, we have to travel on the day before the match, play Israel in Israel and then from there go on to Russian Federation".
There was no initial reaction from the Israeli FA or from Israeli politicians.
Rajoub has long urged FIFA to expel Israel from the worldwide football federation, citing Israeli travel restrictions on Palestinian soccer players and because Israel maintains teams in West Bank settlements.
The ambassador of Palestine in Argentina, Husni Abdel Wahed, had expressed his opposition to the friendly match, saying the match would be similar to them celebrating. the occupation.
The embassy opened on May 14, fanning Palestinian anger and intensifying protests on the Gaza border, with Israeli forces killing at least 61 Gazans that day.
Palestinians are outraged at US President Donald Trump's decision last December to recognize Jerusalem as Israel's capital, breaking with decades of policy, and move his country's embassy there. On Tuesday, a group of Catalan pro-Palestinian protesters called out the names of the players and asked them not to participate in the "cover-up" of a social conflict.
"I don't consider myself the best, I think I am just another player.On the field, we are all the same when the game begins", Messi said.