The council adopted the resolution last month after the United States refrained from using a veto to block the measure in a break from its usual practice of shielding its Middle East ally.
The cut to Israel's USD 40 million annual contribution to the United Nations represented the portion of the UN budget allocated to four committees on Palestinian issues, the Israeli mission said.
"It is unreasonable for Israel to fund bodies that operate against us at the UN," Israeli Ambassador Danny Danon said in a statement.
The announcement came a day after the US House of Representatives overwhelmingly voted in favor of a measure condemning the UN stance and chastising President Barack Obama's administration for abstaining in the Security Council vote.
The cut in funding is the first in a series of retaliatory measures that the Israeli mission said would be taken at the United Nations after the new US administration takes office.
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