In March a court ruled the man, Abdul-Aziz al-Abdi, was mentally unstable and sent him to a psychiatric institution, but the victim's father appealed the verdict.
Yehiya Yaish0Naharisaid his son Moshe was in the company of four Muslim men when he was shot in the town of Raida in December and had clearly been targeted.
Al-Abdi's lawyers said they would take the case to the Supreme Court, the country's highest judicial body.
There are 200-300 Jews in Yemen. About 50,000 moved to Israel in an airlift begun in 1949.
Yemen, the Arab world's poorest country, is struggling with a Shiite revolt in the north, a secessionist movement in the south and growing militancy among Sunni al Qaeda sympathizers.
The unrest has raised fears that Yemen will slip into chaos and provide a base for al Qaeda orpirates operating in the Indian Ocean.
Sunni Muslims make up the majority of Yemen's 23 million inhabitants, while most of the rest are from the Zaydi branch of Shiite Islam.