In a statement, Coach Mark Dantonio said the suspension was due to "a violation of team rules," the Detroit News reported Thursday.
Dantonio provided no details about the violation and said the decision was "extremely disappointing for all parties involved."
Bullough has twice been named team captain.
He was not with the team when it arrived in Pasadena, Calif., Wednesday for the game against Stanford Jan. 1. Announcement of Bullough's suspension was made late Wednesday.
Bullough is ranked 11th in Michigan State football history with 30.5 tackles for 103 lost yards.
His grandfather, father and two uncles played for MSU. His brother, Riley, is a redshirt freshman.
The suspension comes after Bullough and another player were arrested following a 2011 disturbance at a bar in Aspen., Colo., the Detroit Free Press reported.
Bullough, then 19, was charged with being a minor in possession of alcohol, a misdemeanor. He was sentenced to nine months probation.