The ad says: "In any war between the civilized man and the savage, support the civilized man. Support Israel Defeat Jihad."
New York's transportation agency barred the ads citing demeaning language.
But a judge ruled in July for the American Freedom Defense Initiative (FDI), the group behind the campaign.
The FDI has been battling to display the ad since it was refused by the New York authorities last year.
Aaron Donovan, spokesman for New York's Metropolitan Transportation Authority (MTA), told the BBC they had no choice but to run the ad.
"Our hands are tied," he said. "The MTA is subject to a court-ordered injunction that prohibits application of the MTA's existing no-demeaning ad standard.
"That standard restricted publication of ads that demean people on the basis of their race, sex, religion, national origin or other group classification. The judge recognised our intention but found our attempt to be constitutionally deficient."
Mr Donovan added that the MTA might consider changing its regulations at a board meeting next week.
Manhattan district judge Paul Engelmayer said in his July ruling that the language in the FDI ad was protected under the constitution's First Amendment right to free speech.
Pamela Geller, executive director of the FDI, said: "I'm glad to see that the freedom of speech has finally prevailed."
Ibrahim Hooper, spokesman for the Council on American-Islamic Relations, told the BBC that "this and similar advertisements are designed to promote anti-Muslim bigotry".
He pointed out that the FDI has been listed as a hate-group by the Southern Poverty Law Center, a civil rights group.
The ads have also appeared on San Francisco's public transport system. In response, the transit authority ran anti-bigotry ads next to the FDI's.
According to the New York Times, the FDI has bought space to run the ads in Washington DC metro stations.
But the local transport authorities have deferred display of the ad, citing concerns for public safety "given current world events".
Protests have erupted in several countries in response to an amateur video mocking Islam. A total of 30 people have died in seven countries as a result of the protests, including four US diplomats.
Pro-Israel adverts that equate jihad with savagery are to appear in 10 of New York's subway stations next week, after officials failed to block them.