Chelsea have criticised FIFA's transfer ban as "totally disproportionate and extraordinary" and pledged to launch the strongest possible appeal against the ruling.
FIFA's dispute resolution chamber found the English club guilty of inducing winger Gael Kakuta, 18, to breach his contract with French club Lens and banned the Blues from registering any new players for the next two transfer windows.
But Chelsea are astonished by the ruling, both in terms of the ban and the financial punishment, and in a brief statement the English club said they would be launching "the strongest appeal possible".
A statement from the club read: "Chelsea will mount the strongest appeal possible following the decision of FIFA's Dispute Resolution Chamber over Gael Kakuta.
"The sanctions are without precedent to this level and totally disproportionate to the alleged offence and the financial penalty imposed.
"We cannot comment further until we receive the full written rationale for this extraordinarily arbitrary decision."
Lens requested compensation for Kakuta as well as calling for sanctions to be imposed on the FA Cup holders and FIFA's DRC agreed that Chelsea had indeed been guilty of inducing the youngster to break his contract and announced their verdict in a short statement.
"The French club had lodged a claim with FIFA seeking compensation for breach of contract from the player and requesting also sporting sanctions to be imposed on the player and the English club for breach of contract and inducement to breach of contract respectively," said FIFA.
"The DRC found that the player had indeed breached a contract signed with the French club. Equally, the DRC deemed it to be established that the English club induced the player to such breach.
"As a result the player was condemned to pay compensation in the amount of EUR 780,000, for which the club, Chelsea, is jointly and severally liable, and sporting sanctions were imposed on both the player and Chelsea in accordance with art. 17 par. 3 and 4 of the Regulations on the Status and Transfer of Players.
"A restriction of four months on his eligibility to play in official matches is imposed on the player Gael Kakuta while the club Chelsea is banned from registering any new players, either nationally or internationally, for the two next entire and consecutive registration periods following the notification of the present decision.
"Furthermore, Chelsea, has to pay RC Lens training compensation in the amount of EUR 130,000."
Kakuta, a skilful left-winger, is viewed as one of Chelsea's most promising young players. He ended his first season as top scorer in the youth side and was voted the academy's player of the year. However, last February his season was ended by a double fracture of his ankle.
Meanwhile the club's chief executive Peter Kenyon has hailed the new contracts signed by Ashley Cole, John Terry and Didier Drogba.
Kenyon says the new deals were a key part of Chelsea's summer activity and hinted that England midfielder Joe Cole would be next to sign a contract extension.
The Blues made only one big signing this summer, with Russian Yuri Zhirkov arriving from CSKA Moscow for £18million - and the new deals for their top stars could become even more important in the wake of FIFA's decision to ban the club from signing new players.
Kenyon insists that the new long-term contracts signed by Cole, Terry and Drogba are as important as signing three world-class players.
"We've concentrated very hard this summer in retaining the players we have. Inevitably in a transfer window it is all about who you bring in but we shouldn't overlook who we have got," said Kenyon.
"If you look at Drogba, Terry or Cole, they are world-class players that could walk into any other team in Europe and I am delighted that we have retained them."
And Kenyon believes Joe Cole will be next. He has been out of action since January following knee ligament damage and his current contract expires next June.
"Joe is just back in training and we are all delighted to see that. We want - and he wants - to remain at Chelsea."