Islam El Shehalby, an ultraconservative Salafi Muslim, had come under pressure before the games from Islamist-leaning and nationalist voices in Egypt to withdraw from the first-round heavyweight bout against Or Sasson.
With about a minute and a half left in the bout, Sasson earned an automatic victory with two throws of El Shehaby.
The Egyptian lay flat on his back for a moment before rising and standing opposite Sasson in front of the referee. When Sasson extended his hand, El Shehaby backed away, shaking his head.
Competitors in the Japanese martial art typically bow or shake hands at the beginning and end of a match as a sign of respect. El Shehaby refused to comment.
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Sasson advanced to the semifinals, where he lost to eventual champion Teddy Riner of France. In the repechage competition, however, he won a bronze medal.
Later, Sasson said his coaches had warned him that El Shehaby might refuse to shake his hand even though the two have never fought before.
"Now I'm thinking only about my medal," he added.
The International Olympic Committee set up a disciplinary commission to look into the incident.
"Things happen in the heat of the moment that are not acceptable," IOC spokesman Mark Adams said. "We believe the Olympic movement should be about building bridges, not erecting walls. There's absolutely no excuse for it."
"It's a shame if that happens," Adams said.
The International Judo Federation called it a sign a progress that the bout even took place between the two athletes.
"This is already a big improvement that Arabic countries accept to (fight) Israel," spokesman Nicolas Messner said in an email. The competitors were under no obligation to shake hands, but a bow is mandatory, he added.
Even though El Shehaby ultimately bowed, "his attitude will be reviewed after the games to see if any further action should be taken," Messner said, adding that the ethics commission of judo's governing body would review the incident after the Olympics.
"What the player did after the match, and not shaking hands with his rival, is a personal action," the committee said in a statement.
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