''This is a very important day in the struggle over the moral image of Israeli society,'' said Industry and Trade Minister Ran Cohen, a member of the leftist Meretz Party who sponsored the bill with the aim of dismantling the shrine to Dr. Goldstein. ''A great disgrace has been wiped from our face. The other half of the stain will be removed when the shameful inscription is erased. This monument symbolized everything that is anti-Jewish, anti-Israeli and antihuman. It was a site of incitement and education for murder.''

When workers arrived this morning to dismantle the grave plaza, Dr. Goldstein's father, Yisrael Goldstein, lay down on the tombstone. A few moments later, he was asked to leave. ''He was a righteous man,'' Mr. Goldstein said, sobbing. ''He gave his life to sanctify God's name. What are they doing here? What a shame. God, please forgive us.''

Mr. Goldstein repeated claims by many settlers here that his son had acted to prevent a planned massacre of Jews by Arabs. ''He was there that morning to prevent the slaughter that would certainly have taken place,'' Mr. Goldstein said. ''Now look what we've come to.''

As the demolition proceeded, Shmuel Ben-Yishai, a militant settler, taunted the police and soldiers through a loudspeaker, giving them a Nazi salute. ''You don't have to speak German to take apart Jewish graves,'' he said. ''God will take his revenge on you. God willing, you won't make it through the year, and we'll have the privilege of dancing on your blood.''

Others shouted: ''Wreck Rabin's grave! Rabin's next!'' They were referring to the tomb of Prime Minister Yitzhak Rabin, who was assassinated by a Jewish extremist opposed to peace efforts with the Palestinians. Border police were posted today at Mr. Rabin's grave at the Mount Herzl cemetery in Jerusalem.

In the Palestinian-ruled section of Hebron, Mayor Mustafa Abdel Nabi Natshe welcomed the demolition, saying it would help heal the scars left by the massacre.

''This is very important for us and for the Israelis, together, to remove the remains of the massacre, as well as for the peace process,'' Mr. Natshe said. ''It's important for the Israelis to know that someone who commits such actions against civilians and Muslims at prayer must not be regarded as a hero or saint.''