The bombing of the AMIA (Asociacion Mutual Israelita Argentina ) Buenos Aires Jewish community center killed 85 people and injured hundreds in July 1994.
On Sunday, Argentina and Iran signed an agreement to establish the commission to investigate the attack without updating Israel, The Times of Israel said.
Israel's Foreign Ministry issued a statement saying Jerusalem expected to be kept abreast of developments and is keen to be informed but not involved, the website said.
Iran was found culpable by Argentina's courts and Interpol warrants were issued against five Iranians, including Defense Minister Ahmad Vahidi, and a Lebanese national.
An Argentinean newspaper reported in the 1990s that Argentina agreed to stop investigating the attack in exchange for improved economic ties with Iran, The Jerusalem Post said.
An unnamed diplomatic official said Argentine President Cristina Fernandez is fascinated with Venezuelan President Hugo Chavez and his close ties with Iran, and appears keen to follow suit, The Post said.