The withdrawal came "out of respect for the League of Conservation Voters," Lazio said Wednesday night.
"The ad runs counter to the intent and spirit of our endorsement," said Betsy Loyless, political director for the national environmental group, which backed both candidates.
The ad, airing upstate, claimed Clinton "supports a radical environmental treaty that would wipe out thousands of manufacturing jobs in New York."
The treaty, the Kyoto Protocol, is designed to reduce global warming by cutting down on emissions from fossil fuels like oil and gas.
Lazio has said he does not support the Kyoto treaty because many nations with poor records on pollution have yet to accept it.
Most governments, including the United States, have held off on ratification votes on the treaty until agreement is reached on how it would actually work. Negotiations among 150 nations on those details resume Nov. 13 in the Netherlands.
Leaders of the Sierra Club and the state branch of the League of Conservation Voters accused Lazio of misleading them.
"When Lazio was seeking our endorsement, he seemed very supportive of the Kyoto Protocol," said Rhea Jezer, a spokeswoman for the Sierra Club, which endorsed Clinton.
Lazio's campaign maintains he never expressed support for the agreement.
Separately, the New York Observer reported that Lazio sent a fund-raising letter to the chairman of a Muslim group's New York chapter. Lazio has criticized Clinton for initially accepting $50,000 raised at a Boston event that the American Muslim Alliance claimed it organized. Some alliance members have been quoted as defending the use of violence against Israel, and Clinton returned the money after learning of the group's link to the event.
Lazio's campaign sent Faroque Khan a computer-generated letter asking for donations of "$30 or $60," the newspaper reported.
"It's the height of hypocrisy," Khan told the Observer. "On the one hand you want to take money from whoever wants to give it to you, and on the other, you are criticizing your opponent for accepting money from the same people."
Lazio said his campaign has sent out 18 million fund-raising letters, and that if Khan had contributed, the money would have been returned.
The letter stated: "I may not have the president of the United States in my corner but that's OK, I'd rather have you!"
Clinton accused Lazio of "hypocrisy," saying: "It shows a pattern in Mr. Lazio's campaigning of saying one thing and doing something else."