Kellner, a Democrat from the Upper East Side of Manhattan, was stripped of his position as chairman of the Committee on Libraries and Education Technology on Monday, the New York Times said.
He will be prohibited from holding leadership positions, will have his staff reduced and will be unable to have interns, Assembly Speaker Sheldon Silver said.
The ethics investigation determined Kellner, 35, had made suggestive sexual comments that created a hostile work environment and violated the assembly's policy.
"Let me be clear -- this type of behavior is not to be tolerated," Silver said in a statement released Monday. "I hope these actions will send a loud and clear message that we will not tolerate this type of behavior and that sexual harassment has no place in the assembly."
Kellner's punishment followed criticism of Silver for his handling of sexual misconduct, the Times reported.
Earlier this month, Dennis Gabryszak, a Democratic assemblyman from the Buffalo area, was accused of making sexual comments to female aides, and in May, Vito J. Lopez, Democrat from Brooklyn, resigned after a sexual harassment scandal.
Rosie O'Donnell unveils nearly 50-pound weight loss
Putin thinks Obama would save him if he were drowning