The club granted stadium access to supporters in order to erect flags and banners in tribute to departing club captain Scott Brown who plays his final match at Celtic Park tonight before his move to Aberdeen.
However, a photograph posted on Twitter by supporters group, North Curve, showed a display of Palestine flags had been draped across the safe-standing areas, along with the message: "The North Curve is flying the flag for Palestine at tonight's Celtic game."
Celtic have responded by removing the banners and issuing a statement criticising the actions of the fans for exploiting the Brown tribute for their own ends.
It read: "We had invited supporters to pay tribute to our Club captain, Scott Brown, by giving them the opportunity to display their own banners in the stadium.
"Unfortunately a small group, which was given access in good faith, has attempted to exploit this opportunity, taken advantage of an occasion intended for our Club captain, Scott Brown, and used it for a different purpose.
"Clearly this is unacceptable and the display was immediately taken down by the Club."