At FIFA's congress in Bangkok in May, the Palestinian Football Association (PFA) called for its Israeli counterpart to be suspended and for Israeli teams to be banned from FIFA events.
FIFA was initially set to hold an extraordinary session of its ruling council before July 20 to review the independent legal analysis and decide how to proceed.
However, the deadline was pushed back to give legal experts more time to complete a report.
At the organisation's headquarters in Zurich on Thursday, the FIFA council adopted the recommendations and conclusions reached in the legal analysis.
It decided that its disciplinary committee would be mandated to investigate the alleged offence of discrimination raised by the PFA.
Meanwhile the FIFA governance, audit and compliance committee "will be entrusted with the mission to investigate -- and subsequently advise the FIFA Council on -- the participation in Israeli competitions of Israeli football teams allegedly based in the territory of Palestine."
FIFA president Gianni Infantino said in a statement: "The FIFA Council has implemented due diligence on this very sensitive matter and, based on a thorough assessment, we have followed the advice of the independent experts.
"The ongoing violence in the region confirms that, above all considerations... we need peace.
"As we remain extremely shocked by what is happening, and our thoughts are with those who are suffering, we urge all parties to restore peace to the region with immediate effect."