Rangers, one of the best supported clubs in Britain, are in dispute with Britain's tax authorities and could face a bill of more than 50 million pounds.
Corporate restructuring specialists Duff & Phelps have been appointed by the club to run their affairs, with cost-cutting to try to balance the books now inevitable.
Rangers were docked 10 points by the Scottish Premier League, leaving them 14 adrift of Celtic but still in second place.
"As Rangers FC is subject to an Insolvency Event, a ten point deduction has been applied to its total points in the League Championship for the current Season. In addition, Rangers FC is subject to restrictions on the registration of Players with the SPL whilst in administration," a league statement said.
The crisis facing such a big club, champions a world record 54 times, has sent shockwaves through British football where many smaller teams face a precarious existence.
English Championship club Portsmouth are set to go into administration this week over an unpaid tax bill while Hearts in Scotland have also run into financial difficulty amid the global economic crisis.
Rangers Chairman Craig Whyte said a combination of rising debts and the threat of a big tax bill made the move inevitable.
"Due to its cost structure, the club has been loss making for many months," Whyte said in a statement.
"It remains our firm belief that the club's future can be secured and we hope this period of administration will be as short as possible," added Whyte, who bought an 85 percent stake in the club for a nominal one pound last May.
The Scottish club had warned on Monday that it was likely to go into administration over the next few days but the tax authorities hastened the move when they took court action on Tuesday over nine million pounds in unpaid payroll and sales taxes.
Paul Clark of Duff & Phelps said the administrators would ensure that Saturday's home game with Kilmarnock could go ahead.
Media reports said Strathclyde Police had been seeking guarantees the club would pay them for their duties at the match.
Scottish Football Association Chief Executive Stewart Regan said it was "a profoundly sad chapter in the history of Scottish football."
"In light of confirmation that Rangers Football Club have appointed administrators, I would like to express my deep regret that a Scottish institution should find themselves in the kind of parlous state that has necessitated today's course of action," he said in a statement.
"I shall also be seeking a discussion with the appointed administrator in early course, to establish their intentions for the club given the wider implications for the Scottish game."
The "Old Firm" of Rangers and Celtic dominate the game in Scotland, with one of them having claimed the title every year since Sir Alex Ferguson's Aberdeen won it in 1985.
Rangers, who have traditionally had strong ties to the Protestant community in Scotland and Northern Ireland, have an average home attendance of more than 45,000.
However, the 12-team Scottish Premier League is a poor relation of its English counterpart in terms of television revenue and sponsorship.
Rangers sold Croatian international striker Nikica Jelavic to English Premier League club Everton last month and a prolonged period of turbulence would add to the root problem of Scottish football - a lack of genuine competition.
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