The match in Jerusalem's Teddy Kollek Stadium was to be Argentina's final game before they kick off their World Cup campaign in Russian Federation on June 16.
The Palestinian Football Association (FA) had earlier called on Arab and Muslim sports fans to burn photos and T-shirts of Messi if he attended the friendly match.
"The Embassy of Israel regrets to communicate the suspension of the match between Israel and Argentina", a statement said, referring to "threats and provocations" against Argentina captain Messi.
Under pressure from pro-Palestine campaigners, Argentina has canceled a controversial World Cup warm-up match against Israel in the occupied Jerusalem al-Quds amid an global outcry over the regime's crimes against Palestinians.
Although there is nothing official as of yet, Spanish outlet "Ole" are reporting that the friendly will not be held, and Argentina will not travel to Israel.
Calling the Argentinian decision to play in Israel "handing oneself over to politics" Rajoub claimed the Israeli government desires that "Palestinian children will see their heros play [soccer] over the graves of their fathers".
Rajoub wrote to Claudio Tapia, the head of Argentina's FA, last week accusing Israel of using the match as a "political tool". "This is a Palestinian victory one nil at the 90'th minute", said Join List MK Ahmad Tibi, "all due to a self-goal from [Culture] Minister Miri Regev".
"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".
News of the cancellation sparked cheers in Gaza, where over 120 Palestinians have been killed by Israeli forces since March 30, which marked the start of a series of protests demanding the right to return for those driven out of their homeland.
Last month, US President Donald Trump stirred global anger and condemnation with a decision to relocate the US embassy to Jerusalem, recognising the city as the capital of Israel. The Jewish state considers the entire city its own "indivisible" capital.
He called the Barcelona forward a "symbol of love and peace", and called on him to not participate in the beautification of "the fascist occupation's image".