The party dropped Suresh Bhardwaj as a large section of the supporters expressed their "displeasure" over the decision, AAP leader Ashutosh said in a press conference here.
Rajesh Gupta will now be contesting from Wazirpur constituency on AAP ticket, he added.
According to sources, the decision came following an internal investigation conducted by the party over a complaint received against Bhardwaj.
"This candidate was given preference over others because of the positive feedback received by the party but despite this there were reports that Bhardwaj had hid certain facts," the party sources said.
"When confronted he could not give a satisfactory answer after which a decision was taken to change the candidate," the sources added.
The party also tweeted, "AAP has dropped Mr Suresh Bhardwaj from its list following some prima facie negative report received against him from the area".
The party said that this is not the first time it has withdrawn a candidate as during the last Lok Sabha elections it had withdrawn a "series of candidates".
During the last Assembly polls, the party had dropped its Rajouri Garden candidate Pritpal Singh Saluja but couldn't withdraw his name as the last date of withdrawal of names was already over.