Incident, which occurred several weeks ago, reexamined after leftist org. initially distanced itself from anti-Semitic remarks.
A researcher for the extreme left group B'Tselem has denied the Holocaust leaving the organization scrambling to clean up its image.
Undercover reporter Tuvia Tenenbom recorded the researcher, Atef Abu-Alrub, saying that the Holocaust is a "lie" that he "doesn't believe" during a tour of Bedouin village Khirbet Al-Makhul in Judea and Samaria.
Tenenbom's book Catch the Jew, which was released last month, documented the incident.
After an expose by Channel 2 on the remarks in September, B'Tselem spokesman Sarit Michaeli claimed that the remarks were "lies" and taken out of context.
The organization's views have apparently changed, however, and on Sunday, a Facebook post by the group pledged to "seriously examine the issue."
"After an [initial] investigation conducted with the researcher, and in a letter sent to our employees, we established that Mr. Abu feels 'unequivocally that the Holocaust is a 'crime,' was a 'threat against the Jewish people,' and that Channel 2 translated the words of another speaker who was present," the organization began.
"[However,] a few days ago a video was posted of the full conversation. Indeed, most of the conversation that was filmed is translation of a third person [present at the interview]," it continued. "But, upon watching the video, we saw that it shows that contrary to the above, the [remarks about the Holocaust] were not translating the words of a third person, but were made directly by Mr. Abu-Alrub."
"In view of this, we seek to fix our response on this matter, which was given in good faith and make it clear that we are disgusted," it concluded. "B'Tselem is careful in maintaining the reliability and accuracy of its work and publications. Therefore, we promise to hold inquiry as soon as possible into the incident and we will publish the decision as soon as it is made."
B'Tselem has been accused in the past of espousing anti-Israel and anti-IDF views, and for publishing stories which obfuscate the facts.
Earlier this year, it became the center of the "David the Nahalawi" scandal, after a group of Palestinian Arab teens - who are encouraged to provoke soldiers and taunt them in front of video cameras to spread false portrayals of "Israeli aggression" - provoked a soldier into cocking his gun after threatening him in Hevron.
The soldier, known as "David the Nahalawi," faced disciplinary action, sparking an immense public backlash over the IDF's policy toward purposeful provocations. David was eventually reinstated to his post.
In another incident, a B'Tselem cameraman actively participated in anti-Israeli riots in June 2013, throwing rocks at Israeli soldiers before claiming he was "just a cameraman" and "was not involved" in the unrest. B'Tselem banned the cameraman from further activities, but also distanced itself from involvement in the case.