The moviemaker shocked reporters and critics at a press conference for his new release Melancholia on Wednesday (18May11) when he went off on a tangent about his German ancestry and how he can "understand" and "sympathise with" Hitler.
He went on to claim he's "not against Jews" but then launched a rant about Israel, branding it a "pain in the a**".
Von Trier - whose new film premiered to great acclaim from journalists - was forced to apologise for his remarks to Cannes officials, who explained that he felt he had "allowed himself to be egged on by a provocation" during the screening.
But organisers at the event have decided the comments were too controversial for comfort, and have declared Von Trier "persona non grata" at the festival.
A statement from a Cannes spokesperson says, "The festival's board of directors... profoundly regrets that this forum has been used by Lars Von Trier to express comments that are unacceptable, intolerable, and contrary to the ideals of humanity and generosity that preside over the very existence of the festival.
"The board of directors firmly condemns these comments and declares Lars Von Trier persona non grata at the Festival de Cannes, with effect immediately."
Von Trier was the toast of Cannes back in 2000, when his Dancer In The Dark movie won the festival's revered Palme d'Or award for Best Picture.