The Advertising Standards Authority (ASA) has decided to outlaw the ad, which mimicked a horror film in which young people were scared by a doll whenever they played a song.
The ASA argued that the ad was "particularly likely" to scare younger Spotify users.
In response, Spotify said: "We acknowledge the ruling from the ASA and regret any distress the ad may have caused the complainant."
Spotify previously fell foul of the regulator after running a YouTube ad that featured scenes of young people playing the song 'Havana' by Camila Cabello.
The ad featured a "horror film-style doll" that was scaring young people.
At the time of its ruling, the ASA said: "The fact that the ad was set inside a home, including a bedtime setting, and featured a doll, meant it was particularly likely to cause distress to children who saw it."
However, Spotify defended itself, saying that 73 percent of the audience for the the ad were between 18 and 44.
The streaming service said: "We take our responsibilities as a marketer very seriously and continue to be mindful of the ASA's guidance on the effective and appropriate targeting of advertising campaigns."