Iceland's public broadcaster RUV announced the decision on Wednesday, Polish private broadcaster TVN24 reported.
RUV said in a statement that "the participation of Israel's public broadcaster, KAN, has divided members of the European Broadcasting Union (EBU) and the public."
Earlier, Spain, Ireland, the Netherlands and Slovenia said they would boycott the contest, according to Poland's PAP news agency.
Israel's KAN said last week the country would take part in the event.
Israel’s participation in Eurovision has drawn controversy due to the war in the Gaza Strip.
The war began on October 7, 2023, when Hamas attacked Israel, killing 1,200 people and abducting 250, including children.
Israel launched a military campaign in response that has killed more than 70,000 Palestinians, according to reports.
Polish public broadcaster TVP said on Wednesday that Poland would send its representative to next year's contest.
TVP said in a statement it was aware of the "scale of tensions" surrounding the event and understood "the emotions and anxieties."
Still, it said it believes Eurovision "has a chance to once again become a space filled with music—and music only."
The European Broadcasting Union (EBU), which runs the annual competition, said an overwhelming majority of its members agreed the contest should remain a "uniting celebration of music and art."
While "some members won't participate in 2026, we're expecting some 35 participating broadcasters," it added.
Eurovision regularly includes several non-European participants, such as Armenia and Australia. EBU members are drawn from the European Broadcasting Area, which extends beyond Europe.
Austria and Germany strongly supported Israel’s inclusion in the 2026 contest and threatened to boycott if Israel were barred.
Austria, which hosts the 2026 event, appealed to the five countries not to boycott Eurovision. Foreign Minister Beate Meinl-Reisinger said Eurovision and "art in general" were "not the right space to impose sanctions."
The 70th Eurovision Song Contest will take place in May in Vienna, with the semifinals on May 12 and 14 and the final on May 16 at the Wiener Stadthalle.
This year’s contest took place in Basel, Switzerland, where Austria's Johannes “JJ” Pietsch won with his ballad Wasted Love. Israel came in second, with its representative Juwal Rafael garnering the most votes from the public.
Poland’s Justyna Steczkowska finished 14th.
The Eurovision Song Contest is open to all members of the EBU, which includes public broadcasters from Europe and the Middle East.
Israel's KAN has been an EBU member since 1957 and has been sending its representatives to Eurovision since 1973. So far, the country has won the competition four times.
The Eurovision Song Contest was first held in Lugano, Switzerland, in 1956.
Vienna previously hosted the contest in 1967 and 2015.
(pm/gs)
Source: TVN24, PAP, ebu.ch