"It is nothing to do with us, Israel is not connected in any way to this story," foreign ministry spokesman Yigal Palmor told AFP, condemning the amateurish film as "intolerable intolerance."
"If he is a citizen (of Israel), so what? We're not responsible," Palmor said of the film which the Wall Street Journal said was produced by Israeli-American Sam Bacile.
"He didn't do it for us, in coordination with us or through any sort of channel connected to Israeli institutions. He's a complete loose cannon, on his own."
Earlier, an Orthodox Israeli rabbi and former cabinet minister condemned the film, clips of which were released on YouTube, as "garbage and slime."
"Although freedom of expression and the right to use satire are sacred democratic principles, these freedoms should not be used as an excuse to publish garbage and slime," said Michael Melchior, a long-standing advocate of inter-faith dialogue.
"The film of Sam Bacile, who identifies himself as a Jew and an Israeli, published under the guise of the 'war on terror,' is in fact a film that tramples upon the faith and dignity of hundreds of millions of Muslim believers and upon Mohammed, the prophet of Islam, in the most degrading and ugly way," Melchior said in a statement.
Entitled "Innocence of Muslims," the low-budget movie which features actors with strong American accents, portrays Muslims as immoral and gratuitusly violent.
A purported portrayal of the life of the Prophet Mohammed, it touches on themes of paedophilia and homosexuality, and sparked protests in Egypt violence in Libya that killed US ambassador Chris Stevens and three American officials.
Israel's interior ministry said that it does not comment on whether or not any individual holds Israeli citizenship.
"As a Jew and an Israeli rabbi, I am ashamed of the demeaning style and language of this film," said Melchior, a former minister.
"It goes against the substance of the Torah of Israel and desecrates the name of God."