The national press advert headed "Food You Can Trust" said the Food Safety Authority of Ireland (FSAI) found traces of equine DNA at a tenth of 1% in two Iceland quarter-pounder burgers.
But the ad went on to claim that the testing method used by the FSAI "was not an accredited test" and the accepted threshold level was 1%, or 10 times the level reported in the Iceland product.
The ad said subsequent tests of the same batch of burgers by two accredited independent laboratories found no evidence of contamination.
One reader complained that the ad "denigrated" the FSAI.
Iceland said its claim that the testing method used by the FSAI was not accredited was a statement of fact supported by comments made by the Food Standards Agency.
But it amended the claim when the FSAI contacted the supermarket with concerns after the advert appeared, and also published a statement on the Iceland website "which acknowledged that the FSAI's test results were valid and that their testing method was widely used in the burger industry elsewhere in the world".
It found that the FSAI's initial test did not use an accredited methodology, although it was conducted by an independent accredited laboratory, but a second set of tests which reconfirmed the results did use accredited methodology.
The ASA said: "We considered that ... the overall impression created by the ad was that the FSAI had not taken due care to ensure the accuracy or validity of the tests used, and therefore that its findings were questionable.
"We understood that was not the case. We concluded the ad discredited the FSAI and therefore breached the code."
It ruled that the ad must not appear again in its current form and added: "We told Iceland to ensure their advertising did not discredit or denigrate organisations in future."