According to reports, President Maduro has appropriated the song for a controversial new citizen's assembly, which will be elected on Sunday to rewrite the constitution.
The president was seen clapping along to the remix, as his audience danced. The government has downplayed the referendum and has continued its plans for the constituent assembly.
Last week record label Universal Music Latin Entertainment said Despacito in its original and remixed versions had reached 4.6 billion streams across platforms including YouTube and Spotify, making it the most streamed song of all time. "At no point was I ever consulted, nor have I authorized the use or change of lyrics of "Despacito" for political ends, much less in the midst of the deplorable situation that is taking place in a country I love as much as Venezuela".
"Despacito", which means "very slowly" in Spanish, is a song very popular since its release in January.
Daddy Yankee took to Instagram to post a screenshot of headlines about Maduro's use of the song, which he crossed out in red. "You dictatorial regime is a mockery, not only for my Venezuelan brothers, but also for the whole world".
"What can you expect of a person who has stolen so many lives", asked Daddy Yankee.
More than 7.5 million Venezuelans recently voted in a symbolic referendum against the constituent assembly and the opposition has vowed to hold a 48-hour strike in protest this week.
Some 100 people have died in the unrest, which has further hammered an imploding economy that is running short of food and medicine.
Rewriting the constitutional is immensely unpopular in Venezuela, where the pollster Datanalisis found that 85 percent of people oppose the move, and many believe it's a power grab by Maduro ahead of next year's presidential elections. He says it is the only way to bring peace back to the convulsed nation.