The action came less than a week after a picture appeared in a British tabloid newspaper showing Phelps smoking from a marijuana pipe.
Phelps said earlier Thursday that he might retire because of the incident.
Phelps won eight gold medals at last year's Beijing Olympics, the most ever by one athlete in a single Games. He holds the career gold medal record with 14.
The photograph was taken during a party in November at the University of South Carolina and was published by News of the World.
"It's definitely not what I wanted, and it's clearly not what my mom wanted," Phelps told The Baltimore Sun.
He said he was considering retirement rather than train for the 2012 Olympics in London. He said he would consult with his family and coach before making a final decision.
A majority of his sponsors have vowed to continue to support him and the international swimming governing body has accepted his apology.
USA Swimming, however, reprimanded Phelps Thursday. The organization said it was withdrawing financial support from Phelps and declaring him ineligible to compete for three months.
"This is not a situation where any anti-doping rule was violated, but we decided to send a strong message to Michael because he disappointed so many people, particularly the hundreds of thousands of USA Swimming member kids who look up to him as a role model and a hero," the organization said in a statement. "Michael has voluntarily accepted this reprimand and has committed to earn back our trust."