Msallem was arrested last week on suspicion of killing an elderly couple and their two young granddaughters.
He was also suspected of raping a 13-year-old girl in Ketermaya earlier this year.
When police brought him to the scene of the crime a day after the murder, angry villagers overwhelmed the policemen, beat Msallem with sticks and stones and stabbed him.
To cheers and applause, they stripped him to his underwear and socks, paraded him through the street and hoisted him up on an electricity pole with a butcher's hook.
Lebanese troops eventually arrived and took away his corpse.
Test for authorities
Security sources said Msallem had confessed to the crime but his motive was not clear.
Human Rights Watch called on Lebanese authorities to prosecute the perpetrators and said nothing justifies mobs taking the law into their own hands.
"The Lebanese authorities are facing a test: if they don't reassert the rule of law by prosecuting those who killed a suspect who was entitled to the presumption of innocence, the law of the jungle will have won the day."
Many of the villagers were unrepentant while others said authorities had to bear some responsibility for sending the suspect out in public with only a few policemen.
Lebanon's police chief said that he has taken disciplinary measures against the officers who were escorting Msllem.
The lynching has created tensions between the two countries.
The Lebanese embassy in Cairo reportedly asked for extra protection after an anonymous caller threatened to avenge Msallem's murder, although the embassy later denied those reports.
Ibrahim Najjar, Lebanon's justice minister, has already apologised for the lynching.
"I would like to personally apologise to the government and people of Egypt for the reaction in the village of Ketermaya, which would not have happened had it not been for the gruesome crime that preceded it," he said in a statement on Tuesday.
Najjar delivered his statement standing next to Mohammed Abdul Hakam, one of Egypt's assistant foreign ministers.
The attack has been also condemned by a number of Lebanese officials, including Michel Sleiman, the president, and Ziad Baroud, the interior minister.