Last week it was announced that the flag would be flown above Glasgow City Chambers to "show solidarity" with those affected by the recent conflict in Gaza.
The move was condemned by the Glasgow Jewish Representative Council. Its president said he was angered and hurt by the decision.
However, Glasgow City Council leaders chose not to reverse their decision and the flag flew above the local authority's headquarters on Friday.
A spokesman confirmed the council had received around 600 complaints from members of the public over the decision.
The complaints come as Glasgow Tory councillor David Meikle faces fresh calls to quit after he flew the Israeli flag from the City Chambers on the same day.
More than 2,000 people have signed a petition urging him to resign over what they called a shameful stunt.
Mr Meikle, who represents Pollokshields and is Glasgow's only Tory councillor, accused council leaders of failing to condemn the actions of Hamas.
The petition states: "He has shown no regard to the views and feelings of his constituents.
"He is entitled to his beliefs and opinions.
"But because of his unprofessional conduct, the place and the timing of his expression leads us to believe he can no longer represent us and should therefore resign immediately."
Deputy leader Councillor Archie Graham defended the local authority's decision to fly the Palestinian flag.
He said the decision was a "gesture of humanitarian solidarity with the innocent civilians".
Mr Graham added: "The life of a Palestinian child is of equal value to the life of an Israeli child.
"The gesture, following representation to the Lord Provost from the Mayor of our twin-city of Bethlehem, was certainly not intended as an indication of support for any particular regime or movement.
"The council administration has made it clear that our position is that the rocketing of Israel by Gaza-based militants must stop, a ceasefire should be universally observed, both sides should engage in meaningful negotiations, and the blockade should be lifted as prerequisites for a viable Palestine alongside a secure Israel."
Mr Graham said the council was well aware of the sensitivities and "insecurities" among the local population that had been caused by the conflict.
He added: "We are very supportive of community-based efforts to sustain what are strong and respectful relations between Glasgow's Muslim and Jewish populations.
"Glasgow utterly abhors and rejects any forms of discrimination, including anti-Semitism and Islamophobia."