The show appeared to suggest that the Church of Nativity was located in Israel, rejecting an answer that said it was in Palestine.
There seemed to be just $200 on the line when "Jeopardy!" contestant Katie Needle buzzed in with the answer "What is Palestine?"
But host Alex Trebek's response, a decisive "no," has set off a wave of controversy.
Friday evening's clue in the category "Where's that church?" was: "Built in the 300s A.D., the Church of the Nativity." After Needle's answer was rejected, Jack McGuire buzzed in with the reply "What is Israel?" and the $200 was added to his score.
With that, "America's favorite quiz show" was thrust into the debate surrounding a longstanding geopolitical conflict in the Middle East.
The Church of the Nativity, which Christians believe to be the birthplace of Jesus, is located in Bethlehem, just south of Jerusalem in the occupied West Bank.
It is controlled by the Palestinian Authority.
Palestinian rights and advocacy groups responded furiously online to the Jeopardy incident.
Omar Baddar, the deputy director of the non-profit Arab American Institute, tweeted that the show's decision to recognize the church as within Israel and not Palestine was "unacceptable!"
He continued: "@Jeopardy owes an apology for endorsing Israel's universally-condemned illegal takeover of Palestinian lands."
Some Twitter users also noted that Needle's score after her "Palestine" answer was seemingly subtly refunded after a commercial break, with no explanation given to viewers.
NBC News has reached out to the show for comment.
"This is outrageous," said Hisham Melhem, a fellow at the Arab Gulf States Institute in Washington.
"The Church of the Nativity is in Bethlehem, #Palestine, which was occupied by Israel in 1967. @Jeopardy screwed up geography and history. Fix it."
Israel seized land in the West Bank and East Jerusalem during the 1967 war with its Arab neighbors.
The Church of the Nativity is listed as a World Heritage Site and is the oldest basilica in the holy land. It is a popular destination for Christian pilgrims and tourists from across the globe.
Christians in occupied Gaza who want to travel to the West Bank for Easter or Christmas must apply to the Israeli government for temporary single-use permits. Last Christmas, Gazans said fewer applications than usual were accepted, according to Reuters.
The Jeopardy controversy comes amid renewed focus on the issue in the U.S.
President Donald Trump is a close ally of Israeli Prime Minister Benjamin Netanyahu.
Trump stunned both Palestinians and the international community when he recognized Jerusalem as Israel's capital in 2017, moving the U.S. Embassy from Tel Aviv to the highly contested city.
Netanyahu has suggested he could annex parts of the West Bank, a move that would be highly inflammatory.