Galliano, 51, will no longer have the right to wear the medal following its withdrawal under a decree signed by President Francois Hollande which was published in France's official journal on Thursday.
The former artistic director of fashion house Dior was convicted last year of hurling anti-Semitic insults at patrons of a Paris bar.
Galliano blamed the outburst on drink and drug problems and went into rehab for two months. He has since kept a low profile, but recent unconfirmed reports suggest he is considering moving to Los Angeles.
Dior have replaced him with Belgian designer Raf Simons.