With the decision, approved in a 431-62 vote at the 216th annual general assembly of the PCUSA, the denomination is believed to be the largest organization or institution to join the divestment campaign against Israel. It is the first Christian denomination to do so.
When some commissioners expressed reservations about the divestment plan, Reverend Mitri Raheb, a Lutheran pastor from Bethlehem and an ecumenical guest at the assembly, said divestment was important so churches can take direct action.
For too long, he said, the churches have simply issued statements, which is not enough.
Raheb, who is also general director of the International Center of Bethlehem, said churches should send strong messages to companies - a reference to Caterpillar Inc., which builds armored bulldozers used by Israel to demolish Palestinian homes.
In 2001, the combined value of the church's foundation and pension fund was estimated at $7 billion.
Leaders of the liberal mainline Protestant church approved several other anti-Israel resolutions at their gathering in Richmond, Va., and also refused to halt funding for "messianic congregations" that target Jews for conversion.
The Presbyterian resolutions came just as Jewish organizations were hailing the results of a historic international interfaith meeting in Buenos Aires last week, where Roman Catholic officials for the first time signed on to a document equating anti-Zionism with anti-Semitism.
The assembly set the stage for the church to divest itself from companies that receive $1 million dollars or more in profits per year from investments in Israel or have invested $1 million dollars or more in Israel.
In a news release, the PCUSA liaison to the Middle East, Rev. Victor Makari, was quoted as saying: "If nothing else seems to have changed the policy of Israel toward Palestinians, we need to send a clear and strong message."
The church statement noted that "divestment is one of the strategies that U.S. churches used in the 1970s and '80s in a successful campaign to end apartheid in South Africa."
The Jeruslam Post reported this week that a director at the pro-Israel Anti-Defamation League, Rabbi Gary Bretton-Granatoor, called the assembly's resolutions offensive and distressing.