The match, set to take place in the Iranian city of Isfahan, “has been cancelled due to unanticipated and unforeseen circumstances”, the AFC Champions League said in a statement, without elaborating.
“We asked them to remove it before going to the pregame warm-up and they didn't remove it. The team went back to the lockers.”
The official said the two sides then met AFC representatives to determine if the match would be rescheduled.
Sepahan said the match was cancelled by the referee after Al Ittihad players left the stadium, according to a statement published by Iran's state news outlet Irna.
Mohammed Saket, general manager of Sepahan, told Iranian state television that his side would “immediately complain to the AFC” about the incident.
“The request of the Ittihad team was outside of sports customs and against the usual principles,” he said.
The stadium in Isfahan “has hosted dozens of international games with the same appearance”, he added.
“The Ittihad team had trained yesterday with the same conditions and the existing design of the stadium, and they also thanked the Sepahan team.”
Footage circulating on social media showed images of Al Ittihad training in the stadium in proximity to the statue. It is unclear when those images were taken.
Social media footage also showed Sepahan supporters throwing items in the direction of the statue on Monday evening and chanting “we don't want to politicise football”.
The Saudi state-affiliated Al-Ekhbariya channel reported on Monday night that Ittihad had left Iran for Saudi Arabia.
This year's Asian Champions League competition is being staged after a “groundbreaking agreement” was reached between the Saudi Arabian and Iranian football federations, allowing teams from the kingdom to play in Iran after years of playing matches in Dubai and Doha.
Cristiano Ronaldo received a warm welcome in Tehran two weeks ago when Al Nassr became the first Saudi Arabian team to visit Iran since 2016.
This year Riyadh and Tehran resumed diplomatic relations after years of estrangement.
The AFC requires all members to be neutral in regard to political and religious topics.
“Member Associations shall manage their affairs independently and without undue influence from third parties,” it said in a 2017 letter to stakeholders.
Neymar's Saudi club Al Hilal was scheduled to play on Tuesday against Iranian side Nassaji Mazandaran.
There was no immediate word on Monday as to whether the match would go ahead.