The 28-year-old actor was just upset that the company didn't ask for his consent.
The opera company said Wednesday it would stop using the promotional poster for Verdi's "Rigoletto."
The nude image, which appeared last year in the poster, was taken from a 2001 staging in which Di Pace had a small role.
"We take photographs of all productions and we may use those for promotional purposes in the future," Royal Opera House spokesman Christopher Millard said. "He was in a photograph that was a striking, fantastic image which we used for publicity purposes for subsequent performances."
Millard said the company had received a letter from Di Pace's representatives expressing his unhappiness and noting that "to Juan's embarrassment his penis has been airbrushed out."
The company said it had altered the image in various ways for the posters, including covering Di Pace's groin area with a cloth in one version.
Di Pace's publicist, however, said the dispute had "nothing to do with his anatomy."
"He was perfectly happy in the first place to get naked and take photos," said spokesman Eugene O'Hara. He said the problem was "they used his image for seven years without consent or payment."
Millard said the Royal Opera had no performances of "Rigoletto" planned for this year and would not use the poster again.
Argentina-born Di Pace is due to appear in the film version of the ABBA musical "Mama Mia" alongside Meryl Streep and Colin Firth.
