Macklemore said on Instagram that several US venues told the promoter they would prohibit him from performing as Sheeran's opening act for the Loop tour, prompting Sheeran's team to remove him.
That is despite the fact that the rapper - best known for his breakout hit Thrift Shop and the same-sex marriage anthem Same Love - has been making similar comments about the plight of Palestinians for years.
Macklemore wrote that his comments were issue now because of the platform he had while performing in such a major tour.
"At a certain level of exposure, 'Free Palestine' becomes too much of a risk."
A growing chorus of organisations and experts say Israel's wartime actions in Gaza amount to genocide - an accusation Israel vehemently rejects.
Sheeran has not commented on Macklemore's removal.
The promoter, Messina Touring Group, confirmed to Rolling Stone that it had been notified by venues that "they will not allow a concert to take place with Macklemore on the line-up, which would result in the cancellation of the tour and impact hundreds of thousands of fans".
Among the venues is Gillette Stadium, home to the NFL's New England Patriots.
Owner Robert Kraft said the decision was a result of Macklemore's recent comments "and a broader history of anti-Semitic rhetoric and imagery that we believe has been deeply offensive and hurtful to the Jewish community".
He said his decision was not about diminishing the suffering of Palestinians, but Macklemore's advocacy "should not come at the expense of the Jewish community or obscure the responsibility of Hamas".
The rapper exclaimed "Free Palestine" at MetLife Stadium during the September 5 date of the tour while introducing his song Hind's Hall.
Written following the 2024 campus protests in support of Palestinians, it's named for Hind Rajab, a five-year-old Palestinian girl who was killed after Israeli forces fired on her family's car in Gaza City.
"To all of my Jewish brothers and sisters, criticism of Israel, criticism of apartheid, being against genocide, it in no way is criticism of you," he said during the concert.
"This message is for peace, love, for all human beings to be treated with dignity, respect, and equality."
His comments drew criticism from fellow singer Pink, who herself then drew backlash.
Macklemore said he held no ill will towards Sheeran, whom he considered a friend, but "our friendship can't change my responsibility to tell the truth about what happened".
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