A public relations officer for the temple, Wanlop Namwongprom, said the development committee had conceived the dome as a viewpoint tower which would shield visitors from rain and sunlight.
It was not intended to benefit the monks, he said.
However, due to the public backlash, the temple had decided to cancel the project, Mr Wanlop said.
The rooftop of the building where the dome was set to be installed will now be covered with transparent sheets to shield visitors from the weather.
The building which was set to house the dome will not be demolished, but will continue to serve as a VIP lounge and library, the panel said.
Construction workers and temple staff had nearly finished the removal of the uncompleted dome. Only four foundation poles remain after removal work began on Tuesday.
The 20 million baht dome project was expected to be completed next year. It was intended to exhibit the history of Phra That Doi Suthep and Chiang Mai as well as welcoming important guests.
The dome was designed to resemble the emblem of Phraya Kuena, the sixth Lanna king of the Mengrai dynasty who started building the temple 600 years ago.