The 33-year-old Gloucester centre has until early next week to lodge any appeal with acting RFU chief executive Martyn Thomas. Neither the player nor his club have so far commented on Twickenham's punishment.
Tindall also received a stinging rebuke from senior RFU figure and former England fly-half Rob Andrew, who conducted Twickenham's investigation along with the union's legal and governance director Karena Vleck.
Tindall has captained his country, won 75 caps and featured in England's 2003 World Cup final-winning team during an 11-year stint on the Test match stage.
But he has now paid a hefty price for events at a bar in Queenstown during England's ill-fated World Cup campaign in New Zealand, where they made a quarter-final exit and were badly affected by off-field issues.
Tindall was captured on CCTV footage from the Altitude Bar in conversation with a woman. He later issued an apology for misleading the England management over his movements that night, having initially claimed he did not go on to another bar.
RFU professional rugby director Andrew said: "Mike Tindall's actions reached a level of misconduct that was unacceptable in a senior England player and amounted to a very serious breach of the EPS (elite player squad) code of conduct.
"While we acknowledge his previous good character, it needs to be made clear that what he did will not be tolerated."
The decision, though, has not gained widespread approval.
Former England star Austin Healey tweeted: "25k fine is wrong. Tindall has been made a scapegoat.. he set bad example but ...Andrew trying to justify his position."
Tindall's England team-mate Jonny Wilkinson described the Gloucester star as a "great, great guy and player".
Wilkinson told talkSPORT: "There were moments on that tour we all look back on and on the tournament and we would probably say we could have done things differently, and I am involved in that as well."
Asked whether Tindall was an obvious target for criticism, Wilkinson added: "It's tough, but I think there's always going to be people out there to get you and make things worse for you.
"Mike Tindall's a great, great guy and player.
"On that tour you needed someone to be able to have that strength on one side and attack the rugby the way he did, but it's a tricky situation.
"If we could turn back time and do things a bit differently, we would have a go."
Many people felt England manager Martin Johnson should have made an example of Tindall, who married the Queen's granddaughter Zara Phillips earlier this year, and sent him home early from New Zealand.
Later during the trip, Johnson reprimanded Tindall's England colleagues James Haskell, Dylan Hartley and Chris Ashton following a female hotel worker's complaint she had been subjected to lewd comments at the team hotel in Dunedin.
Haskell and Ashton have now received £5,000 suspended fines from the RFU and warned about their future conduct, although Hartley was cleared.
In a statement issued, the RFU said: "The Rugby Football Union has taken the following disciplinary action regarding breaches of the England elite player squad agreement during the 2011 Rugby World Cup.
"Mike Tindall has been removed from the England elite player squad with immediate effect and fined £25,000 for his conduct around the events that took place in Queenstown on the night of Sunday, September 11, 2011.
"Chris Ashton has been fined £5,000 (fine suspended until December 31, 2012), for his part in the events in Dunedin on Friday, September 9, 2011 and warned as to his future conduct.
"James Haskell has been fined £5,000 (fine suspended until December 31, 2012), for his part in the events in Dunedin on Friday, September 9, 2011 and warned as to his future conduct.
"Dylan Hartley has been cleared of being involved in the exchange of inappropriate language which led to allegations of wrongdoing against himself, Chris Ashton and James Haskell, in Dunedin on Friday, September 9, 2011."
Andrew added: "We have considered all the evidence carefully and interviewed the players at length.
"These actions have not been taken lightly, but we believe that in all these cases the sanctions are commensurate with the level of seriousness of what occurred.
"Regarding the events in Dunedin, it should be stressed that the allegations of very serious wrong-doing made against Chris Ashton, Dylan Hartley and James Haskell by Annabel Newton, a member of staff at the team hotel, were entirely false.
"We do not believe the players had any intention to sexually harass or intimidate Ms Newton.
"However, the incident is precisely the kind of dangerous, compromising situation the players were warned about prior to departure for New Zealand and that they were specifically told to avoid in the EPS code of conduct.
"While we found that Dylan Hartley played no part in the ill-considered exchange with Annabel Newton, Chris Ashton and James Haskell's behaviour on September 9 did breach the EPS code of conduct and they have each been given suspended fines of £5,000.
"If they commit any further breaches of the code before December 31, 2012 the fines will become due.
"Finally, these episodes and the subsequent disciplinary action should stand as a strong reminder that the highest standards of personal conduct are expected from any England player on and off the field."
England's next game is their RBS 6 Nations opener against Scotland at Murrayfield on February 4, when a selection shake-up is anticipated after the World Cup flop.