Google is de facto recognising a state of Palestine.
Google spokesman Nathan Tyler said that Google had decided to change the name of the Palestinian Territories to just Palestine in its products.
He says Google consults with various sources and authorities when naming countries, and in this case is following the lead of several international organisations.
The move comes after a UN decision last year upgrading the Palestinians' status to "non-member observer state".
Israel says Palestinian statehood should be reached through negotiations not unilateral moves.
Israeli foreign ministry spokesman Yigal Palmor says Google is not a diplomatic entity which begs the question of why it is getting involved in a controversial international political issue.