A month before several German states introduced sweeping bans on smoking in restaurants and bars on Jan. 1, an events planner, DMP, started offering the T-shirt for sale on its Web site.
Jewish groups responded with outrage.
"This is an absolute abuse of the Jewish genocide," the deputy president of the Central Council of Jews in Germany, Dieter Graumann, said Thursday. "It is a scandal to exploit the murder of the Jews in order to symbolize the people's desire to smoke."
The shirt features a yellow Star of David similar to the one Jews were forced to wear under the Nazis. The world "smoker" is written across the star instead of "Jew."
Graumann said the sale of the T-shirt did nothing to help German smokers. Instead, it reminded Germans - Jews and otherwise - of worse times, he said.
"It is unimaginative, brainless and tasteless," he said.
On Friday the T-shirt was no longer for sale on DMP's Web site, although it said more than 1,000 orders had been placed in the past month.
A statement on the site said the shirt had been designed to highlight what it called the "disgraceful exclusion" of smokers by society.
"After decades of tolerance, the smoker is being denounced as an outcast, a second-class human being," the online statement said.
The office of the public prosecutor in Itzehoe said Friday that it was investigating whether the shirt broke any German laws.
"We are checking if this case can be treated as a criminal offense," prosecutor Ralph Doepper told The Associated Press.
DMP did not respond to several telephone calls seeking comment about the shirt or its decision to halt its sale.