The European Broadcasting Union (EBU) had said on Friday it was investigating an "incident" involving Klein, 26, whose quirky song Europapa had made him one of the favourites.
The 68th version of the contest, normally a festival of catchy songs and tongue-in-cheek kitsch, is taking place amid protests in host city Malmo over the participation of Israel, due to its war in Gaza.
Swedish police earlier on Saturday said a man had been questioned for threatening a Eurovision employee inside Malmo Arena following the competition's second semi-final on Thursday.
The person was not detained, police said without naming the individual, adding the matter had been referred to a prosecutor.
"While the legal process takes its course, it would not be appropriate for him (Joost) to continue in the Contest," the EBU said in a statement.
A representative for Klein did not immediately respond to a request for comment.
Dutch broadcaster AVROTROS said in an email it was "shocked" by the EBU's decision and considered it "disproportionate".
Eurovision expert Paul Jordan told Reuters it was unprecedented for an artist to be expelled on the eve of the final.
"Obviously we don't know what's happened now. He could be found innocent," Jordan said.
"I just think it's a great shame, but the show must go on, as they say."
The incident has nothing to do with the Israeli delegation, AVROTROS Eurovision commentator Cornald Maas said.
"It is, among other things, hellish for Joost Klein, who is a unifier, and his team," Maas wrote on social media platform X.
The EBU said in a later statement that Dutch viewers would still be allowed to vote for other contestants and that the Dutch jury result would still be included in the final.
Bookmakers have Croatia's Baby Lasagna, real name Marko Purišić, 28, with Rim Tim Tagi Dim, as front-runner to win the contest, followed by Israeli solo artist Eden Golan, 20, with her song Hurricane.
Other nations high on betting list include France, Italy, Ukraine and Ireland. Streaming data from Spotify also suggests a chance for host nation Sweden.
After Klein's disqualification, 25 countries will compete in Saturday evening's grand final.
Billed as a feel-good celebration of European diversity, this year's contest has been thrust into the political spotlight with protesters - online and on the streets of Malmo - calling for Israel to be excluded from the competition.
Eurovision organisers have resisted such calls, but demanded that Israel tweak the lyrics of its original entry to remove what they said were references to Palestinian group Hamas' deadly October 7 attack on Israel, which sparked its war on Gaza.
Some booing was heard from the crowd before, during and after Golan's performance in the semi-finals on Thursday, but there was also applause and Israeli flags being waved, according to a Reuters journalist in the auditorium.
In central Malmo, more than 10,000 pro-Palestinian campaigners, including climate activist Greta Thunberg, staged a non-violent protest ahead of the semi-final, waiving Palestinian flags and shouting "boycott Israel".
A smaller group of pro-Israeli supporters, including members of Malmo's Jewish community, also staged a peaceful demonstration in the city, defending Golan and her right to take part in the contest.
More demonstrations are planned for Saturday and again expected to draw thousands of protesters. There will also be an alternative music festival in the city that has billed itself as the "genocide-free song contest".
Protesters have complained of double standards as the EBU banned Russia from Eurovision in 2022 following its invasion of Ukraine.
