Adam Silver, the commissioner of the National Basketball Association, held a news conference to announce the results of the investigation, which found that the voice heard on two recordings were those of Sterling.
"The hateful opinions are those of Mr. Sterling," Silver said. "The views are deeply offensive and harmful. That they came from an NBA owner only heightens the outrage." Silver banned Sterling for life from NBA and Clipper events, and he cannot be part of any NBA or Clipper decisions. Also, Sterling could be forced to sell the Clippers with a 3/4 vote by the NBA's Board of Governors, Silver said.
"I fully expect to get the support I need from the other NBA owners to remove him," Silver said.
Several owners immediately chimed in with support of Silver's decision, as did players and former players.
"Commissioner Silver has made the right moves in response to this unfortunate absurd spectacle." -Cleveland Cavaliers owner Dan Gilbert on Twitter.
"Commissioner Silver thank you for protecting our beautiful and powerful league!! Great leader!! #BiggerThanBasketball #StriveForGreatness" - Miami Heat star LeBron James on Twitter.
Charlotte Bobcats Chairman and former Chicago Bull Michael Jordan released a statement, "I applaud NBA Commissioner Adam Silver's swift and decisive response today. He sent a powerful message that there can be zero tolerance for racism and hatred in the NBA. I'm confident that the league, our players and our fans will move on from this stronger and more unified."
The Los Angeles Clippers' website read, "We are one."
Sterling, the league's longest-tenured owner and someone with an estimated net worth of about $2 billion, did not offer any immediate comment.
The penalties, which were announced only three days after the scandal broke, are the harshest ever issued by the league and among the stiffest punishments ever given to an owner in professional sports. Silver said a league investigation found that Sterling was in fact the person on the audiotapes that were released over the weekend and immediately sent shock waves throughout the game.
"We stand together in condemning Mr. Sterling's views," Silver said. "They simply have no place in the NBA."
Sterling acknowledged he was the man in the recordings, Silver said.
Sterling still owns the team, but going forward he is immediately barred from attending any NBA games or practices, being present at any Clippers office or facility, participating in any business or player personnel decisions involving the team, or being part of any league business.
It's unclear how Sterling will respond.
"This league is far bigger than any one owner, any one coach and any one player," said Silver, who as commissioner has broad powers under what's typically called the "best interest of the game" clause of the NBA constitution.
Sterling's $2.5 million fine will be donated to organizations dedicated to anti-discrimination and tolerance efforts that will be jointly selected by the NBA and the Players Association, Silver said.
"This has all happened in three days, and so I am hopeful there will be no long-term damage to the league and to the Clippers organization," Silver said. "But as I said earlier, I'm outraged so I certainly understand other people's outrage. This will take some time and appropriate healing will be necessary."
Sterling's comments were released over the weekend by TMZ and Deadspin, and numerous NBA owners and players have condemned them. Even President Barack Obama weighed in on the crisis, the first of Silver's brief tenure as commissioner.
Several sponsors either terminated or suspended their business dealings with the team on Monday, though individual deals that some of those companies have with Clippers stars like Chris Paul and Blake Griffin will continue and were not affected. Still, it was a clear statement that companies, like just about everyone inside the league, were outraged.
"Commissioner Silver showed great leadership in banning LA Clippers owner Donald Sterling for life," Magic Johnson, who was referenced on the taped conversation involving Sterling, tweeted shortly after the league's decision was announced.
Johnson's role on the tape stemmed from Sterling's female companion apparently posting a photo of her and the Hall of Fame player on her Instagram account. That photo has since been deleted, but raised Sterling's ire nonetheless.
"It bothers me a lot that you want to broadcast that you're associating with black people. Do you have to?" Sterling asks the woman on the tape.
The issues raised when the tapes were released over the weekend represent just another chapter in Sterling's long history of being at the center of controversy.
In the past, he's faced extensive federal charges of civil rights violations and racial discrimination in his business dealings, and some of his race-related statements would be described as shocking.
He has also been sued in the past for sexual harassment by former employees, and even the woman who goes by the name "V. Stiviano" - purportedly the female voice on the tapes at the center of this scandal - describes Sterling in court documents as a man "with a big toothy grin brandishing his sexual prowess in the faces of the Paparazzi and caring less what anyone else thought, the least of which, his own wife."
Stiviano is being sued by Rochelle Sterling, who is seeking to reclaim at least $1.8 million in cash and gifts that her husband allegedly provided the woman.
Silver said when he first heard the audio, he hoped it had been altered or was fake - but also said that from his 20-year relationship with Sterling, he suspected the voice was his.
"This has been a painful moment," Silver said, "for all members of the NBA family."
The Associated Press contributed to this report. All rights reserved.