I am going to go out on a limb and suggest that this is a calque from the Septuagint translation of the Psalms. Iubilare is very rare (by my count, less than 10 occurrences) and does not have any attested uses with the dative or ablative.
The Greek, however, is quite clear:
᾿Αλαλάξατε τῷ κυρίῳ, πᾶσα ἡ γῆ (Ps 99 (100): 1)
ἀλαλάζω can be used with the accusative (what they are shouting about) or dative (to whom they raise a cry): the latter usage is seen in the Anabasis:
ἐπεὶ δ᾽ ἐπαιάνισαν καὶ ἡ σάλπιγξ ἐφθέγξατο, ἅμα τε τῷ Ἐνυαλίῳ ἠλέλιξαν. (Xen Ana 5.2)
Then, they sang and the trumpet sounded, and at the same time they raised a shout to Enyalius.
One fact worth noting is that the Psalms, which were such an integral part of the liturgy, were firmly engrained in the minds of early Latin-speaking Christians before Jerome undertook his translation. As a result, the Vulgate follows the Vetus Latina very closely, often with somewhat confusing results. The Vetus Latina (if I am not mistaken) used the Septuagint as its primary source text, so it seems reasonable that they copied the Greek syntax above with the most plausible substitute for ἀλαλάζω: iubilo.
Pius XII commissioned an updated translation of the psalms that follows the Hebrew with less awkward syntax. Its translation is slightly different:
Exsultate Domino, omnes terrae.
Exsulto, as seen in the linked L&S entry, often takes the ablative (alone or with in).
In short: iubilo + dat./abl. is not classically attested and may just be a Latin calque on a Greek construction, though it is readily understood.
