The source of the report, Israel's Maariv newspaper, apologised for its headline and for any offence caused.
The head of the court, Yehoshua Levin, was quoted by Maariv as saying: "There is no basis for abuse of animals from the side of Jewish Halacha [law].''
In a statement, the court denied that a dog had been condemned.
A dog had entered the court and been removed, it said.
The story was reported in the Israeli and international press, including the BBC News website.
The original reports said that the dog entered the Jerusalem financial court several weeks ago and would not leave.
It was reported that the dog reminded a judge of a curse passed on a now deceased secular lawyer about 20 years ago, when judges bid his spirit to enter the body of a dog. The animal was said to have escaped before the sentence was carried out.
An animal welfare organisation filed a complaint with the police against a court official.
In traditional Judaism, dogs are considered to be impure animals A Jewish rabbinical court condemned to death by stoning a stray dog it feared was the reincarnation of a lawyer who insulted its judges, reports say.