Fans had demanded the Kiwi songstress join the Boycott Divestment Sanctions Movement which is making a stand against Israel's oppression of Palestinians.
The Grammy award-winning star had announced her world tour on Twitter, confirming she'll perform in Tel Aviv next year on June 5.
But Israeli media reported today that she had cancelled the show.
Israeli news site YNET quoted a statement from organisers confirming the change.
"We regret to announce the cancellation of the Lorde concert in Israel planned for June. The tickets already bought will be reimbursed within 14 business days. As to the circumstances that led to the cancellation of the show, Lorde is expected to publish a statement via Twitter soon."
Lorde has not yet tweeted herself.
Earlier in the week, Janfrie Wakim, spokesperson for the New Zealand Palestine Solidarity Network told Newshub: "We think it's a very unwise thing for Lorde to have accepted.
"Israel should be boycotted until it complies with international law and the norms of human society."
Fans expressed their disappointment, telling Lorde to use her profile to make a political stand.
"Don't play in Tel Aviv while they have the Palestinians under a brutal occupation! Very disappointed in you! Boycott Israel," one woman wrote.
"Please reconsider your date with apartheid #Israel, respect the Palestinian-led boycott & stand with the oppressed against Israel's brutal Occupation & theft. Would you betray Maoris too," another tweeted.
But some fans have backed the 21-year-old.
"Her not going to Israel won't change the fact that people suffer in the region," one tweeted.
"It's a concert, she's not funding the government's party. If artists were to boycott Israel than they would have to cancel US shows too, since Trump is the main supporter of Israel and its government."
Wakim argues that while Israeli people should be allowed to experience live music freely, Palestinians should also have that right.
On Friday, Lorde tweeted that she was "considering all options" in her first statement about the comcert.
She said that the feedback had been "noted" and she was "speaking with many people about this and considering all options".
She wrote: "Thank you for educating me - I am learning all the time too."
