The Australian Christian Lobby (ACL), which set up the funding campaign said they have received rapid and overwhelming support.
The fund raised more than $2m in less than two days, from over 20,000 people.
The former Wallabies player, who asked his supporters to raise $3m to contest his sacking, agreed to hit "the pause button" on donations.
His contract with the New South Wales Waratahs was terminated after he posted 'hell awaits' sinners including adulterers and homosexuals' on Instagram.
The ACL have said that enough money has now been raised to cover Folau's legal costs.
ACL managing director Martyn Iles released a statement saying: "The outpouring of support for Izzy and for freedom has been staggering in its size and speed.
"This means we have raised enough money for now and can afford to hit the pause button."
He added: "This is an unprecedented outpouring of support which cannot be ignored. Politicians are watching, Rugby Australia is watching, corporate bullies are watching, and those who think it's ok to make people suffer for their beliefs are watching.
"This has become a movement of quiet people who have found their voice. Many of them serve God, many of them love freedom, all of them stand with Israel Folau."
ACL have said that plans to re-open the fundraiser will be considered if the case drags on and additional funds are required, and that any unused funds will be returned to the original donors on a pro rata basis.
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