Jews Asher and Rosa Rapp Wiesenthal were baptised in proxy ceremonies in the US states of Arizona and Utah in January, records show.
Church of Jesus Christ of Latter-day Saints spokesman Michael Purdy said the Church' s leaders "sincerely regret" the actions of "an individual member".
The Los Angeles-based Simon Wiesenthal Center denounced the news.
"We are outraged that such insensitive actions continue in the Mormon temples," said Rabbi Abraham Cooper, a spokesman at the centre.
The Mormon religion allows baptism after death, and believes the departed soul can then accept or reject the baptismal rites.
An agreement in 1995 was supposed to ban the practice of baptising by proxy Holocaust victims, after it was discovered the names of hundreds of thousands of those who died had been entered into Mormon records.
Simon Wiesenthal's parents are long since deceased, with his father dying in World War I and his mother perishing in the Holocaust.
Wiesenthal himself died in 2005 after surviving the Holocaust and dedicating his life to documenting Nazi crimes and hunting down perpetrators. 'Serious breach'
Mr Purdy told the Associated Press news agency that the church considered the act "a serious breach of our protocol".
According to Mr Purdy, the names of the Wiesenthal family were simply entered into a genealogical database by one person.
"We have suspended indefinitely this person's ability to access our genealogy records," he said.
The name of that individual or the individuals who performed the rite were not released.
Evidence that Wiesenthal's parents had been baptised was found by Helen Radkey, a researcher and former Mormon, AP reported.
She regularly checks the Church' s database, and also recently found the names of Nobel laureate and Holocaust survivor Elie Wiesel and several family members on the Mormon list.
"None of the three names were submitted for baptism and they would not have been under the Church' s guidelines and procedures," said Mr Purdy, the Mormon Church spokesman said.
Rabbi Cooper said any further discussion of the problem was useless.
"The only way such insensitive practices would finally stop is if church leaders finally decided to change their practices and policies on posthumous baptisms, a move which this latest outrage proves that they are unwilling to do," he said.
The Catholic Church has also objected to posthumous baptisms of its members.