Rajoub protested after Israel switched the venue of the June game from Haifa to Jerusalem. He urged Palestinians to burn shirts bearing the name of Lionel Messi if Argentina's star went ahead and played there.
The change of venue came at a particularly sensitive time, after U.S. President Donald Trump had recognised Jerusalem as Israel's capital, infuriating Palestinians who want the eastern part of the city as the capital of their own future state.
Global soccer body FIFA said on Friday its disciplinary committee considered Rajoub's statements "incited hatred and violence". It banned him for 12 months and fined him 20,000 Swiss francs (£15,682.6).
Rajoub, it said, was banned from "taking part in any future match or competition taking place during the given period". That included attending matches in any official capacity and participating in media activities at or near stadiums on match days, it added.
Rajoub and the Palestinian Football Association did not immediately respond to the announcement. Israel's association declined to comment.
Argentina decided to pull out of the friendly, which would have been their last appearance before the World Cup, as political pressure mounted over the game.
Rajoub has long tried to get soccer's world governing body, FIFA, and the International Olympic Committee to impose sanctions against Israel. This is mainly because of the Israeli government's settlements policy in the West Bank and because it has imposed travel restrictions on Palestinian athletes citing security concerns. Those bodies have not heeded his calls.
(Reporting by Brian Homewood; Additional reporting by Ori Lewis in Jerusalem; Editing by Andrew Heavens)
