Following the scare of KFC owner, Yum Brands when one of its chicken suppliers in China was found to have used excessive levels of antibiotics.
Wal-Mart says it will reimburse customers who bought the "Five Spice" donkey meat and the US firm is also helping local authorities with an investigation into its local supplier.
The Shandong Food and Drug Administration said the product contained fox meat.
Donkey meat is a popular snack in some parts of China.
Food safety is a sensitive issue in the country where recent scares have undermined consumer's confidence in the food supply chain.
Sales at KFC owner, Yum Brands, were hit when one of its chicken suppliers in China was found to have used excessive levels of antibiotics.
Cat meat sold as Lamb, and cooking oil coming from the sewers...
Wal-Mart is taking action to reassure shoppers, including a setting-up a team to investigate the incident and strengthening its food safety rules.
It also intends to take legal action against the supplier of the tainted donkey meat.
The chief executive of Wal-Mart's Chinese operations, Greg Foran, said: "It is a deep lesson (for us) that we need to continue to increase investment in supplier management."