The 30-year-old was on Tuesday found to have committed a high level breach of Rugby Australia's code of conduct after last month posting on his Instagram account that "hell awaits" sinners including homosexuals.
"ASICS is dedicated to sport and its healthy contribution to society," a company statement read.
"We believe sport is for everyone and we champion inclusivity and diversity. While Israel Folau is entitled to his personal views, some of those expressed in recent social media posts are not aligned with those of ASICS.
"As such, our partnership with Israel has become untenable and he will no longer represent ASICS as a brand ambassador."
Land Rover also recently distanced itself from the devout Christian when it withdrew a car issued to him.
The full-back requested a code of conduct hearing after Rugby Australia indicated it planned to terminate his contract only for the three-man panel to conclude he had committed a high level breach.
The panel is now awaiting written submissions ahead of announcing what sanction to issue to Folau, who was warned a year ago for making comments deemed homophobic on social media but escaped disciplinary action.
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