Foreign Minister Micheal Martin said an investigation had showed that the eight Irish passports used by suspects in the assassination of Mahmoud al-Mabhouh were forgeries.
"The misuse of Irish passports by a state with which Ireland enjoys friendly, if sometimes frank, bilateral relations is clearly unacceptable and requires a firm response," he said in a statement.
Martin said he would not reveal the name or function of the official concerned, in accordance with diplomatic practice.
"I want to state clearly that the official concerned is not accused or suspected of any particular wrongdoing," Martin said. "In being obliged to leave their post prematurely, the official concerned is a victim of the actions of the State they represent."
Dubai has accused Israel of being behind the killing of the Hamas commander and has provided the names of over two dozen alleged members of a team it says tracked and killed the Palestinian, using fraudulent British, Irish, French, German and Australian passports.
Israel has neither confirmed nor denied any role in the assassination, prompting international indignation.
Martin said the Irish investigation discovered no additional evidence linking the Irish passports to Israel.
"The fact that the forged Irish passports were used by members of the same group who carried the forged British and Australian passports, leads us to the inescapable conclusion that an Israeli government agency was responsible for the misuse and, most likely, the manufacture of the forged Irish passports associated with the murder of Mr. Mabhouh," he said.
Australia and Britain have both ordered the expulsion of some Israeli diplomats over the use of fake passports in the assassination.