The board revoked the permit for the East End Madrassah, a Sunday school for Muslim children, citing an ongoing police investigation into alleged anti-Semitic course material.
East End Madrassah came under fire earlier this month after Jewish groups objected to material posted on its website.
A curriculum document compared Judaism with Nazism and said that "treacherous jews" had killed Islam's Prophet.
TDSB spokeswoman Shari Schwartz-Maltz says East End Madrassah will have to find a new meeting place until the police investigation is complete, adding the board has also requested a meeting with school officials to ensure their teachings are in line with the board's policies.
Schwartz-Maltz says East End Madrassah complied willingly and was quick to apologize for the controversy.
"We've had a relationship with the organization for about 30 years, and in that 30 years we've had no complaints whatsoever," she said.
Jewish groups praised the board's decision, calling it an excellent first step.
David Spiro, Toronto co-chair of the Centre for Israel and Jewish Affairs, said he hopes the TDSB will eventually sever all ties with the school.
"Given the presence of anti-Semitic passages in the curriculum, and the dubious activism of its religious leadership, it is clear that the Madrassah has disqualified itself as a partner with the School Board on any level," Spiro said in a statement.
Madrassah issued a written apology for the controversial passages on its website, which it said should never have been included in its curriculum.
The offending material was removed immediately after the organization received a complaint on May 3, it said.
"Our curriculum is not intended to promote hatred towards any individual or group of people, rather the children are taught to respect and value other faiths, beliefs and to uphold Canada’s basic values of decency and tolerance," Madrassah said in the statement issued earlier this month.
"We unreservedly apologize to the Jewish community for the unintentional offence that the item has caused."
Police have announced they are probing an official complaint against Madrassah filed by the Friends of the Simon Wiesenthal Centre, which initially discovered the contentious curriculum content.
Ontario Premier DaltonMcGuinty threw his support behind the investigation, saying there was no room for hatred or intolerance in the province's schools.