Franck Allais placed the red triangle sign - which depicted the silhouette of an orthodox Jewish man - on a lamppost in Stamford Hill, close to a synagogue.
The sign provoked complaints from a Jewish community group - who reported it to police - and local MPs.
Mr Allais told BBC News he "completely regretted" any offence caused.
The artist, who is from Paris, but has lived in east London for 16 years, placed 27 signs around London.
They featured silhouetted figures including shoppers and animals.
His work provoked outrage when neighbourhood watch group Shomrim NE London spotted one of the signs 200m from a synagogue on Forburg Road on Tuesday evening.
It suggested the sign meant "Beware of the Jew" and said it had caused "alarm and distress" among the Jewish community.
But Mr Allais said the work was based on photographs he had taken.
"I take pictures around me of people crossing the road," he said.
Mr Allais said he believed red warning triangles did not have a "bad" meaning, but rather advised motorists to "take care" of the item depicted.
Shadow Home Secretary and MP for Hackney North Diane Abbott said it was "disgusting" and "unacceptable", while Labour's MP for Tottenham David Lammy said it amounted to "despicable, nasty behaviour that has absolutely no place in our community".
Hackney Council estimates there are about 30,000 Charedi Jews in Stamford Hill, the largest community in Europe.
Police said they were investigating the incident as a "religiously aggravated hate crime, in keeping with the reporting of the incident".
No arrests have been made.
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