The Frenchman, well clear of the rest of the field, pulled off his vest as he came around the final bend, put it in his mouth as he waved to the crowd.
He then held it in his hand as he sprinted down the final straight for what appeared to be his third successive European gold in the event but turned out to be a premature celebration.
He initially received a yellow card from a track official for "acting in an unsporting or improper manner" before he started his lap of honour.
But he was later disqualified after Spain, whose athletes finished fourth and fifth, made an official protest citing rules on "clothing, shoes and bibs", organisers said.
Mekhissi-Benabbad's compatriot Yoann Kowal, who had moved from fourth to second in the final 200 metres, took gold instead, ahead of Krystian Zalewski (Poland) and Spain's Angel Mullera.
"When I took off my vest on the last metres, it was because of my joy, of course," he told the championship's official website before the disqualification was announced. "It was the pleasure of winning. I was so happy to defend my title.
"The main thing was to win. I did not know that I was going to get a yellow card for that."
"But this yellow card, this is nothing. It was just the emotion. Today I will enjoy my victory and we have to see how this evening will finish."
Mahiedine Mekhissi-Benabbad of France crosses the finish line (Reuters)
Kowal said: "What Mahiedine did with his vest was not disturbing or anything, nothing important."
Mekhissi-Benabbad has been involved in controversy in the past and was once suspended along with team-mate Mehdi Baala after they traded blows following the 1,500 metres at a Diamond League meeting in Monaco.
At one point Baala head-butted Mekhissi who responded by swinging his arms wildly as he threw a series of punches, some of which missed their intended target.
Elsewhere, double Olympic champion and former world champion Barbora Spotakova won her first European gold medal in the javelin, throwing 64.41 metres with her fifth effort.
Anzhelika Sidorova of Russia won the women's pole vault in dramatic style as she cleared 4.65 metres on her third and final attempt to move above Ekaterini Stefanidi of Greece, who had finished her competition with a best of 4.60 but was ahead on countback.
Frenchman Benjamin Compaore's opening effort of 17.46 metres was enough to win the triple jump and Russia's Sergey Shubenkov retained his title in the 110 metres hurdles as he won in 13.19 seconds.
- Sports & Recreation
- Athletics, Track & Field