"The figure one was replaced by a map of the historic Palestine, before the United Nations resolution of November 20 1947 which established a Jewish state and an Arab state," said the complaint by club president Patrick Kiblisky.
"This map, which does not take into account the present state of Israel, is a symbol for the Palestinian people. These circumstances mean that its use constitutes a political matter."
Palestino, who won the Chilean championship in 1955 and 1978, represent the country's Palestinian-descendant community of around 300,000 people.
The league fined the club the equivalent of $441 for each of the games it used the shirts and ordered them to be re-designed.
"The association is removed from religious and political activities, in general, and anything else which does not have a direct relation to its objectives and to sport," said the tribunal in its six-page decision.
"Consequently, the association prohibits any form of political, religious, sexual, ethnic or racial discrimination."
(Reporting by Brian Homewood; editing by Martyn Herman)
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