The International Olympic Committee (IOC) says Islam El Shehaby received a "severe reprimand" for his behavior following his first-round heavyweight bout loss to Ori Sasson on Friday.
When Sasson extended his hand, El Shehaby backed away, shaking his head. The referee called the 34-year-old El Shehaby back to the mat and obliged to him to bow; he gave a quick nod and was loudly booed as he exited.
The IOC says the Egyptian's conduct "was contrary to the rules of fair play and against the spirit of friendship embodied in the Olympic values."
The IOC aded that the Egyptian Olympic Committee also "strongly condemned" El Shehaby's actions "and has sent him home.
El Shehaby, an ultraconservative Salafi Muslim, had come under pressure from Islamist-leaning and nationalist voices in Egypt before the Rio Games to withdraw, but competed anyway.
The IOC, which set up a disciplinary commission to investigate the incident, said the Egyptian's conduct "was contrary to the rules of fair play and against the spirit of friendship embodied in the Olympic values."
The IOC also asked the Egyptian committee to make sure that all its athletes "receive proper education on the Olympic values before coming to the Olympic Games."
Immediately after the bout, the Egyptian Olympic committee had called it a "personal action" by El Shehaby, adding that he had been "alerted before the match to abide by all the rules and to have sporting spirt during his match with the Israeli player."
Sasson, who lost in the semifinals but later won a bronze medal, had said he was not surprised by El Shehaby's actions because his coaches had warned him he might be refused a handshake. "This was his decision," he said.
Similar incidents have happened before at judo competitions between Israelis and Arabs.
Egypt was the first country in the Arab world to sign a peace treaty and normalize relations with Israel after decades of war.