"Toledo will be allowed in Israel only when his affairs in Peru are settled," foreign ministry spokesman Emmanuel Nahshon said in a statement.
The Peruvian government has said it has information that Toledo, whose wife, Eliane Karp, has Israeli citizenship, could try to flee to the Jewish state.
Peruvian police launched a manhunt for Toledo, 70, once hailed as an anti-corruption champion, after a judge ordered his arrest.
He was initially believed to be in Paris. But the Peruvian government said Friday it had information he was in San Francisco and could try to flee to Israel.
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Toledo is a visiting professor at Stanford University, near San Francisco, where he graduated with a PhD in economics.
He denies the accusations against him, branding them political persecution. But he has struggled to explain where the money came from.
He originally said it was a loan from his mother-in-law that came from compensation she received as a Holocaust survivor.
But his former vice president, David Waisman, himself a prominent member of Peru's Jewish community, said the account was untrue.