The London bar was raided by Metropolitan Police's Wildlife Crime Unit last week over the ingredient in its Moby Dick cocktail.
Edmund Weil, director of Nightjar, said: "The contentious ingredient was ‘whale skin infusion’, which was derived from a single dried piece of whale skin (around 2 x 5 cm) that was bought in a supermarket in Japan last year by one of our employees. This small piece of skin stayed in a single bottle which was topped up with whisky over the course of the year, and used to flavour the drink.
"We are fully co-operating with the police in their enquiries.
"Before the police visit, we weren’t aware that the use of this ingredient was unlawful under the COTES legislation which underpins the protection of endangered animals throughout the EU. We unwisely assumed that since it was obtained lawfully in its country of origin, we were not contravening any laws."
But Weil said in hindsight, having the cocktail on the menu was a "grave error in judgement", regardless of the legal framework.
The drink has been removed from the menu and all proceeds from the sale of the cocktail have been donated to a whale conservation charity.
Read Weil's full statement here.