The search engine changed the tagline on its home page in the Palestinian Territories Friday. Beneath the Google logo, the word "Palestine" appears in Arabic.
The terminology is a controversial issue because the official status of the West Bank, Gaza and East Jerusalem has not been decided.
The United Nations recognized Palestine as an observer state last November -- an action opposed by the United States and Israel.
"We consult a number of sources and authorities when naming countries," Google spokesman Nathan Tyler said. "In this case, we are following the lead of the U.N., Icann [Internet Corporation for Assigned Names and Numbers], ISO [International Organization for Standardization] and other international organizations."
Israel has responded by saying Palestinian statehood is a matter for negotiation, not unilateral moves.
"Google is not a diplomatic entity, which begs the question why are they getting involved in international politics and on the controversial side," Israeli Foreign Ministry spokesman Yigal Palmor said.