It also decided not to air performances by the Irish and Albanian entries.
The EBU said the censorship was not in line with its values of diversity.
"It is with regret that we will therefore immediately be terminating our partnership with the broadcaster and they will not be permitted to broadcast the second Semi-Final or the Grand Final," it said in a statement.
A number of verified accounts on Chinese social media platform Weibo shared still images of the censored performances.
One account, The Voice of Homosexuality, said the broadcaster's decision to remove references to homosexuality was a "major step backwards".
Other Weibo users called for people to "boycott Mango TV," and one user said they "absolutely won't be watching Mango TV next month".
The Irish entry, Ryan O'Shaughnessy, told the BBC that he welcomed the EBU's decision.
"From the very start we've said love is love - whether it's between two guys, two girls or a guy and a girl so I think this is a really important decision," he said.
"They haven't taken this lightly and I think it's a move in the right direction so I'm happy about it."
He will perform at the final in Lisbon on Saturday with a song about the end of a relationship. He was accompanied by two male dancers during the performance that was apparently censored by Mango TV.
Other countries to have reached the final include Australia, Denmark and Hungary.
BBC
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