Chelsea has said they will mount "the strongest appeal possible" after being banned from making any transfers until 2011 by Fifa.
The sanction comes as a result of Chelsea's signing of the French youngster Gael Kakuta from Ligue 1 side Lens in 2007.
FIFA's Dispute Resolution Chamber (DRC) has found that the club induced Kakuta to breach his contract with Lens.
A statement on the Blues' official website read: "Chelsea will mount the strongest appeal possible following the decision of FIFA's Dispute Resolution Chamber over Gaël 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."
The player has been fined 780,000 euros and banned from playing for four months. A statement on FIFA's web site earlier on this afternoon stated:
"Chelsea are 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."
The Blues will also have to pay Lens 130,000 euros in compensation.
Kakuta was voted scholar of the year by Chelsea's Academy staff in 2008 and ended that season as the youth team's top scorer.