Sion were thrown out of the competition and replaced by Scottish club Celtic, who they beat in the final qualification round, because, according to European body UEFA, they had fielded ineligible players.
However, a Swiss civil court ruled on Wednesday that six players signed in the summer were eligible to play in the Swiss League. Sion's case was also heard by the Court of Arbitration for Sport (CAS) on Wednesday with a verdict expected by Monday.
FIFA rarely comments on ongoing legal cases but on Friday issued a statement on its website condemning the club's stance.
"An enormous amount of damage has already been done to Swiss football and the autonomy of the sport. Associations are becoming more and more anxious and the structure of the sport is in danger," FIFA's director of legal affairs Marco Villiger said on the organisation's website.
"It has caused chaos. If every club went to a local court when they disagreed with something, international football would no longer be possible."
Sion were banned by FIFA from signing players for two transfer periods for inducing an Egyptian goalkeeper to break his contract with his club to join them in 2008.
Appeals to both FIFA and CAS were rejected while Sion president Christian Constantin's decision to involve the Federal Supreme Court of Switzerland also failed when it supported FIFA's decision.
The ban finally came into force last year for two consecutive transfer windows.
Sion said they believed the ban ended this summer and made six new signings but FIFA said it was still in force.
The six players were initially barred by the Swiss Football League (SFL) and took their case to the civil court in Martigny, which provisionally ruled in their favour in August and confirmed the decision on Wednesday.
The Swiss league then allowed them to play despite the FIFA ban and they played against Celtic, after which UEFA ruled them ineligible and threw them out of the competition.
The head of the Swiss FA has also accused Sion of damaging the image of Swiss football.
"Unfortunately, it's a fact that it has damaged our image," Peter Gillieron, head of the Swiss FA (SFV), said last week.
"I've heard lots of people wonder how such things can happen in Switzerland.
"With both FIFA and the International Olympic Committee having their headquarters in Switzerland, sport in general, not just football, is in danger if the rules of the federations are undone by appeals to civil courts."
FIFA's Villiger said Sion's case could have serious ramifications for sport generally.
"If a sanction which has been approved by the Federal Supreme Court of Switzerland can no longer be enforced due to the decision of another court, then it will be a dark day for sport," he said.
"However, I don't think it will get that far. We have to fight to ensure any decrees we make which are approved by all authorities are subsequently upheld."
