The naughty Blues apparently induced reserve team player Gael Kakuta to break his contract with French club Lens in 2007.
Fifa said: "Chelsea is banned from registering any new players for the two next registration periods."
It appears the 18-year-old player will also have to pay Lens up to £700k compensation if media reports turn out to be correct.
He is banned from playing for four months.
Chelsea also have to pay Lens £100k for training compensation.
Chelsea failed to nab a significant player in the summer transfer window, missing out on Franck Ribery and Wesley Snyders.
Now they will hope to have a healthy points lead in the Premier League before the January window opens.
The Blues had hoped to nab a player or two then, to compensate for the loss of the African players to their Cup of Nations tournament.
But that avenue is firmly closed.
Chelsea are yet to make a statement on the situation.
The ramifications for the Blues will run deep as owner Roman Abramovich tries to steer Chelsea away from a host of high-profile incidents in recent years.