FIFA's appeal body also imposes a fine of 4.2 million kronor on the Malaysian Football Association.
The seven players will receive a one-year suspension from all football playing.
The players, originally from Argentina, Brazil, the Netherlands and Spain, all took part in a qualifier in June for the 2027 Asian Cup, where Malaysia won 4–0 against Vietnam.
FIFA said the Malaysian Football Association's claims that the players had Malaysian grandparents were incorrect, after the organization's investigators were given access to "relevant original documents" from the players' home countries.
The Malaysian federation now has one month to appeal to the Court of Arbitration for Sport (Cas).
