The penalty, announced Tuesday, from the NCAA Committee on Infractions stems from allegations that players dealt memorabilia, including championship rings and game jerseys, for services at a tattoo parlor.
The scandal reached Tressel, whom the NCAA said withheld information during the investigation. Tressel, who had coached the Buckeyes for 10 seasons and won the 2002 Bowl Championship Series title and lost in the championship game twice, resigned May 30.
The NCAA reduced the number of Ohio State's football scholarships by nine -- three each of the next three seasons -- and put the program on probation for three years in addition to the post-season ban.
Due to the ruling, Ohio State won't play in a bowl game for the first time since after the 1999 season and just the second time since 1988.
Ohio State Athletic Director Gene Smith said the school was "surprised and disappointed" by the sanctions, which were tougher than Ohio State administrators placed on the program.
However, Ohio State officials said they won't appeal the decision.
The Buckeyes were coached by Luke Fickell this past season and went 6-6. They were invited to the Gator Bowl versus Florida on Jan. 2.