According to the foreign ministry on Sunday, Doron Grossman - who was suffering from cancer - had shot himself last Tuesday in a hotel room in the Ethiopian capital Addis Ababa and was later flown back to Tel Aviv for treatment.
Foreign Minister Silvan Shalom expressed his "deep regrets" over the death of the 48-year-old Grossman who had recently been named as ambassador to South Africa and was to have left Ethiopia this week after three years in his post.
Grossman played an important role in overseeing Prime Minister Ariel Sharon's efforts to bring remaining Ethiopian Jews to Israel.
Sharon's government in 2003 gave the green light for 20,000 Falash Mura to immigrate under Israel's law of return, which grants Jews anywhere in the world the right to make the aliyah (ascent) to Israel and claim citizenship.
The Falash Mura are Ethiopian Jews who were forced to convert to Christianity in the last century.