The pre-World Cup fixture was called off after protests by pro-Palestinian groups and claims of threats against star player Lionel Messi.
Ofer Eini blamed Jibril Rajoub, head of the Palestinian football federation, for “doing all he can” to remove Israel from international football.
He said that while protests are legitimate, Mr Rajoub calling for Arab and Muslim fans to burn photos and t-shirts of Barcelona legend Messi had taken it too far.
Earlier, the Israeli embassy said “it regrets to communicate the suspension of the match between Israel and Argentina”, and referred to unspecified “threats” and “provocations” against Messi.
Mr Rajoub told journalists that he had written to Argentina’s government asking that the player not take part.
“The Israeli government is trying to give it political significance by insisting it be held in Jerusalem,” he said, adding that Messi was “a symbol of peace and love”.
He added: “We ask him not to participate in laundering the crimes of the occupation.”
The Palestinian football association welcomed the cancellation of the match and said sport will not be used as “a tool of political blackmail”.
Israeli defence minister Avigdor Lieberman tweeted: “It’s a shame that Argentina’s footballing nobility did not withstand the pressure from Israeli-hating inciters.”
The country’s prime minister, Benjamin Netanyahu, spoke to Argentinian President Mauricio Macri after the cancellation of the match, Israeli news site Arutz Sheva reported.
Mr Macri reportedly told him that he had had no influence over the decision.
Argentina’s foreign minister, Jorge Faurie, suggested some of its players “were not willing to play the game” – without specifying why.
Manager Jorge Sampaoli had aired grievances about having to travel to Israel, saying he would have preferred to stay in Spain, where the team is holding its pre-World Cup training camp.
He said: “From a sporting point of view, I would have preferred to play in Barcelona.
“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 Russia.”
The cancellation means Argentina will not play another friendly match before their opening World Cup tie against Iceland on 16 June.
The country’s about-turn comes as Israel faces fierce criticism over its use of lethal force against Palestinian protesters on the Gaza border.
At least 125 Palestinians have been killed there since 30 March.
Palestinians are outraged at Donald Trump’s decision to recognise Jerusalem as Israel’s capital, breaking with decades of policy, and choosing to move his country’s embassy there.
The embassy opened on 14 May, fanning Palestinian anger and intensifying protests on the Gaza border, with Israeli forces killing at least 61 Gazans that day.
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Palestinians claim the eastern part of Jerusalem, annexed by Israel, as the capital of their future state.
Israel considers the entire city its own “indivisible” capital and says the Hamas group is using the protests at the border as a cover for attacks.