The Egyptian Football Association (EFA) said the club was banned for two seasons following the pitch invasion that killed 74 fans last month when Port Said-based Al-Masry beat Cairo's Al Ahli, the most successful club in Africa.
Port Said Stadium, where the stampede took place, would be closed for three years, the EFA said.
Witnesses said military police fired shots in the air to disperse hundreds of fans protesting outside the Suez Canal Authority building in Port Said.
The clashes began late on Friday and continued into the early hours of Saturday, witnesses said.
"Hundreds of angry fans clashed with military police after the decision was announced," one witness said.
"One was shot dead, in the back, and 18 were injured in the clashes, two of them are suffering gunshot wounds," the medical source said.
The EFA said in a statement that Masry's football activities would be suspended for the 2011/12 and 2012/13 seasons. The club would be reinstated to the Premier League in the 2013/14 season.
During the February pitch invasion, steel doors at the stadium were bolted shut, trapping fans trying to escape from the stands and dozens were crushed to death.
Many fans blamed the government for failing to send enough police to the stadium given the tense build-up to the match, and many believe the violence was started by hired thugs. At least 1,000 people were injured.
Prosecutors referred 75 people, including nine security officials in Port Said, to the criminal court on March 15 to face trial over the violence.
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