NBA commissioner Adam Silver said Donald Sterling would be forced to sell his interest in the basketball team.
The NBA will also fine Donald Sterling $2.5 million, the maximum allowed.
Donald Sterling, 80, was recorded asking a woman, believed to be his girlfriend V. Stiviano, not to associate in public with black people nor bring them to games.
He later said the recording “does not reflect his views”.
In a news conference on Tuesday, Adam Silver told reporters that Donald Sterling’s “hateful opinions… simply have no place in the NBA”.
“That they came from an NBA owner only heightens the damage,” he said.
“I am personally distraught that the views expressed by Mr. Sterling came from within an institution that has historically taken a leadership role in matters of race relations.”
Adam Silver said Donald Sterling would be banned from participating in all team business, as well as attending any NBA practices or games.
The fine will be donated to organizations focused on combating racism, he said.
Adam Silver said he would urge the NBA’s board of governors to force Donald Sterling to sell his stake in the team, which he purchased in 1981.
“Commissioner Silver showed great leadership in banning” Sterling, Earvin Magic Johnson tweeted following the announcement.
The row erupted on Friday when celebrity news website TMZ published a 10-minute audio recording in which a man can be heard criticizing a woman, believed to be V. Stiviano, for posting online photographs of herself with black friends at Clippers games.
On Tuesday, Adam Silver said Donald Sterling had acknowledged it was his voice on the recording. It was not clear how or when the conversation was recorded.
The remarks caused an immediate uproar in Los Angeles and among basketball fans across the country.
The Clippers are competing in the first round of the NBA playoffs, drawing extra scrutiny to Donald Sterling’s remarks.
On Sunday, before a game against the Golden State Warriors, the Clippers staged a silent protest, going through a pre-match warm-up with shirts on inside-out to hide the team’s logo.
The players also wore black wristbands or armbands and all wore black socks with their normal jerseys.
Donald Sterling did not attend the game.
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