Batting first, Israel made 154 for 7 in their 50 overs. Kenya were 157 for 3.
The 21-day tournament will allow the top three non-Test playing countries to qualify for the World Cup in England in 1999.
Malaysia, a staunch supporter of Palestine, has no diplomatic relations with Israel, and Malaysians are banned from virtually all contact with the Jewish state. But Prime Minister Mahathir Mohamad said the cricket team was allowed in to show Israel that multi-racial and multi-religious societies can live in peace and harmony.
Muslim groups in Malaysia, however, are unhappy with the Israeli presence.
India will take over the presidency of the International Cricket Council until June 2000 after the retirement of Sir Clyde Walcott as chairman in June.Reuse content