Haim Pitoussi, spokesman of the National Insurance Institute which administers the memorial wall in Jerusalem's Mount Herzl national cemetery, confirmed that the name of Mohammed Abu Khder, 16, had been erased.
Speaking to AFP on Tuesday after the inscription, his father, Hussein Abu Khder, said his son's name had been placed on the memorial without the family's consent.
"I am Palestinian, not Israeli, even if I am a resident of east Jerusalem, and I do not want his name written next to that of Israeli soldiers," he said.
The wall is one of two -- one bearing the names of fallen soldiers and the other those of victims of terror attacks.
Israel was on Wednesday marking its annual day of remembrance for both groups, with official ceremonies being held across the country.
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Israel's leaders were to attend central ceremonies at Mount Herzl.
The commemoration for soldiers is at 0800 GMT and that for civilians two hours later.
Abu Khder was kidnapped from annexed east Jerusalem on July 2 and his burned body was found hours later in a forest in the western part of the city.
He was allegedly killed by three Jewish extremists in revenge weeks after the kidnap and murder of three Israeli teenagers by Palestinian militants in the southern West Bank.
The three suspects are currently on trial at a court in Jerusalem.
A number of Arab names are inscribed on the wall but the vast majority of those listed are Jewish Israelis killed in attacks carried out by Palestinian militants.