On Thursday the Turkish side were due to join 32 elite European clubs in the draw for the Champions League group stage being held in Monaco at 1645 BST.
Uefa has announced league runners-up Trabzonspor will take their place.
Trabzonspor had already been eliminated from this season's Champions League in the qualifying rounds.
The decision means that their scheduled Europa League qualifier against Athletic Bilbao on Friday has been cancelled, with the Spanish club progressing automatically.
The Fenerbahce decision was taken after the Turkish Football Federation held an extraordinary board meeting on Wednesday attended by Uefa's legal counsel for integrity, Pierre Cornu.Continue reading the main story
The Turkish Football Federation has shown with this decision that it takes its full responsibility in the fight against corruption.Uefa general secretary Gianni Infantino
According to a statement on the TFF website, Uefa wrote to the federation on Tuesday to demand Fenerbahce's withdrawal, threatening wider disciplinary action should they fail to do so.
The letter was forwarded to Fenerbahce, who declined to withdraw, TFF said.
"In the face of this development, on 24 August an extraordinary meeting of the board of directors was held to discuss the threat of the Turkish Football Federation being exposed to severe disciplinary sanctions if Fenerbahce took part in the Uefa Champions League this season, and it was decided to bar them from participating," the statement said.
Uefa general secretary Gianni Infantino added: "The panel considered that the Turkish Football Federation took the right decision to protect the game, fully in line with our zero-tolerance policy against match-fixing.
"The Turkish Football Federation has shown with this decision that it takes its full responsibility in the fight against corruption."
Fenerbahce were crowned league champions last term, pipping Trabzonspor to the Super Lig title with a dramatic 4-3 win at Sivasspor on the final day.