Israeli forces seized the Beaufort Castle and the area around it recently, giving the military a strategic toehold it previously occupied for nearly two decades.
Speaking at a memorial ceremony, Fadlallah said: "The agreement of humiliation and disgrace signed by the authorities will never see the light of day and will not be implemented."
Syrian President al-Sharaa has said he has no interest in doing so and has asserted that Trump's comments were misconstrued. But Trump has doubled down on the idea.
Hezbollah's leader called the agreement a "humiliation," adding that linking Israel's withdrawal to Hezbollah's disarmament as a "very dangerous suggestion."