The ads equate Islamic jihad with savagery.
Similar ads have already appeared on San Francisco buses and at Metro-North stations north of the city.
The group behind the ad, the American Freedom Defense Initiative, has already sued and won the right to display the ads.
Transit officials say the ads were initially rejected for "demeaning" language, but a Manhattan federal court judge ruled in July that the MTA violated the group's First Amendment rightse.
The ad states "In any war between the civilized man and the savage, support the civilized man." It adds, "Support Israel. Defeat Jihad," in between two Stars of David.
Metropolitan Transportation Authority spokesman Aaron Donovan tells The New York Times the agency's "hands are tied," and says the MTA may consider revising its ad policy at a board meeting next week.
New York's Council on American-Islamic Relations calls the ad an attempt to "define Muslims" through hate speech.
(The Associated Press contributed to this report.)
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