The sportswear company is a personal sponsor for Folau as well as a partner to the Wallabies and has acted after the 30-year-old was on Tuesday found to have committed a high level breach of Rugby Australia's code of conduct.
"ASICS is dedicated to sport and its healthy contribution to society," a company statement read.
"We believe sport is for everyone and we champion inclusivity and diversity. While Israel Folau is entitled to his personal views, some of those expressed in recent social media posts are not aligned with those of ASICS.
"As such, our partnership with Israel has become untenable and he will no longer represent ASICS as a brand ambassador."
ASICS are the second sponsor to have cut ties with Folau after Land Rover withdrew a car issued to him.
Folau, a devout Christian, said on his Instagram account that "hell awaits" for "drunks, homosexuals, adulterers, liars, fornicators, thieves, atheists, idolators".
The full-back requested a code of conduct hearing after RA indicated it planned to terminate his contract only for the three-man panel to conclude he had committed a high level breach.
The panel is now awaiting written submissions ahead of announcing what sanction to issue to Folau, who was warned a year ago for making homophobic comments on social media but escaped disciplinary action.
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies