A source at the festival confirmed to AFP on Saturday that Trio Wanderer would no longer be playing, but denied that it was because of political pressure.
"The concert was cancelled because of personal reasons pertaining to Vincent Coq," the group's pianist, the source said on condition of anonymity.
Trio Wanderer was not immediately available for comment.
The celebrated festival is one of the most popular cultural events and is held in Baalbek's spectacular Roman ruins, drawing large crowds.
Lebanese Shiite movement Hezbollah, an avid enemy of Israel, has a strong presence in the modern city by the same name.
On Saturday, the Campaign to Boycott Supporters of Israel in Lebanon (CBSIL) published a letter addressed to the French trio on its website.
It said Trio Wanderer's 2016 concert in the southern Israeli port city of Eilat "insulted the martyrs of Lebanon and of Baalbek".
"We demand that you follow the example of hundreds of musicians and international artists that have declared their support for the cultural boycott of the apartheid state," the letter read.
A boycott campaign over Israel's five-decade occupation of Palestinian territory has been under way for years, spearheaded by the Boycott, Divest, and Sanction (BDS) movement.
Earlier this year, Lebanon banned the screening of Hollywood blockbuster "Wonder Woman" because lead actress Gal Gadot had served in the Israeli military.
Lebanon and Israel are still technically in a state of war, and the Arab League maintains a Damascus-based office responsible for coordinating a regional boycott of the Jewish state.
Other performers at Baalbek this year include Franco-Lebanese star trumpeter Ibrahim Maalouf and American rock band Toto.