Basil McCrea has been given a formal warning following a "public attack" on party policy over the Union flag.
The Lagan Valley MLA was accused by colleagues of indiscipline and speaking in a manner detrimental to the party interest.
He has already lost the party whip at the Assembly following comments about Ulster Unionist flag policy.
A UUP spokesman said the disciplinary committee issued the caution. "Regarding the first complaint, based on comments in an interview Mr McCrea gave to the Nolan Show on BBC Radio Ulster, the committee found Mr McCrea was guilty of indiscipline and of speaking in a manner that was detrimental to the party interest," he said.
"Regarding the second complaint, referring to Mr McCrea's comments in a local newspaper and on BBC Radio Ulster about a possible Assembly Commission consultation on the number of days that the Union flag is flown, the committee considered Mr McCrea guilty of a public attack on party policy and consequently of a further act of indiscipline."
UUP leader Mike Nesbitt took the disciplinary action after Mr McCrea criticised the party's handling of the flag issue.
He described as a "stupid idea" a joint attempt by the UUP and DUP to get the Assembly Commission to examine whether the flag should be flown more regularly at Stormont.
Mr Nesbitt accused his party colleague of having an "inability to exercise self-discipline" or be a team player. He claimed he was doing enormous damage to the UUP.
However, Mr McCrea has insisted his views are consistent with past UUP policy on flags.
Recently he voted against his party in the Assembly. He refused to support a DUP amendment to a UUP motion that deleted a reference to the Good Friday Agreement.