The animated Halloween promotion advertisement on the Hell Pizza website shows the three decomposing celebrities emerging from graves and dancing to Michael Jackson's song "Thriller".
Ledger and Hillary died this year and the Queen Mother passed away in 2002.
Hillary's son Peter said the ad was in "extremely poor taste".
"I think it's a bit disturbing... a little grotesque," he told the Dominion Post.
"I don't think it's funny and I'm not very impressed. It is early days and it's still pretty raw," he said of the death of his father, who conquered the world's tallest mountain in 1953.
TPF Group retail operations manager Glenn Corbett said the company, which owns the Hell Pizza chain, was withdrawing the advertisement but had not meant to offend the Hillary family.
"Clearly he's revered in New Zealand and we all love him," he said. "The idea of Sir Ed being there was intended to be a light-hearted remembrance."
Hell Pizza, a national chain in New Zealand, is no stranger to controversy.
Last year, complaints forced them to withdraw a billboard showing Adolf Hitler clutching a slice of pizza in a Nazi salute.
Funny or insensitive?