Rodriguez, the highest-paid player in baseball, was today suspended for 211 games, starting on Thursday and covering the remainder of this season and all of next.
The Yankees third baseman's ban stems from an investigation into the now defunct Biogenesis clinic in Miami.
Twelve other players involved in the case accepted 50-game bans without appeal today, while Ryan Braun, the 2011 National League MVP, accepted a 65-game ban last month for his involvement in the scandal.
Rodriguez was given the longest suspension as MLB holds evidence to show that he was not only a customer of Biogenesis, but pointed other players in its direction and then obstructed the league's investigation.
In a statement, the league said the 38-year-old was being punished for "his use and possession of numerous forms of prohibited performance-enhancing substances, including testosterone and human growth hormone, over the course of multiple years'' and for his attempts to cover up those violations and obstruct a league investigation.
Rodriguez subsequently released a statement to the American media, which read: "I am disappointed with the penalty and intend to appeal and fight this through the process."
His appeal will be heard by arbitrator Frederic Horowitz, most likely within three weeks, MLB confirmed on its website.
Despite the ruling, Rodriguez is expected to play for the Yankees for the first time this season against the White Sox in Chicago on Monday night.
He has been sidelined for the first four months of the season following hip surgery, but completed a rehab assignment over the weekend and is free to play at the Yankees' discretion with the ban not beginning until Thursday.
"I am eager to get back on the field and be with my team-mates in Chicago tonight. I want to thank my family, friends and fans who have stood by my side through all this," Rodriguez added in his statement.
Although drugs have tainted the careers of some of baseball's biggest names in recent years, Rodriguez is the highest-profile player to be banned during his active career.
He made his Major League debut at the relatively young age of 18, and has hit .300 with 647 home runs during a career spent with the Seattle Mariners, Texas Rangers and Yankees, putting him fifth all-time on the list of home run leaders, 115 behind Barry Bonds - who was never banned for doping but was caught in the BALCO scandal.
The Biogenesis scandal began when a former employee of the now defunct anti-ageing clinic in Florida revealed company documents to the Miami New Times, with the records clearly listing the names of several players who were customers of the clinic, now known to be a distributor of steroids and performance-enhancing substances.
In a statement today, MLB commissioner Bud Selig praised the work of the investigators involved in the case, and said it demonstrated the league's determination to rid itself of doping scandals.
This is not the first time Rodriguez has been caught in a doping scandal.
In February 2009, Sports Illustrated reported that Rodriguez had tested positive for two anabolic steroids, testosterone and Primobolan, during the 2003 season while with Texas.
Those results were part of a government report which found that 104 major league players out of 1,200 tested were positive for performance-enhancing substances, although no punishments followed due to the league's lack of mandatory drug testing and the collective bargaining agreement between the league and the players at the time.
Such penalties were subsequently introduced in 2004.
Rodriguez, in the middle of a 10-year 275million US dollars contract with the Yankees, will now be left fighting for his future career.
Prior to today's ruling it appeared Rodriguez could be facing a life ban as the league broke off negotiations with his representatives, and, even though he has avoided that fate, the Yankees may look for ways to cancel the remaining years in his contract, which runs until the end of the 2017 season and still has around 100million US dollars owing.
The 12 other players punished today all received 50-game bans without the right of appeal.
The list included Nelson Cruz, Everth Cabrera, Jhonny Peralta, Antonio Bastardo, Jordany Valdespin, Francisco Cervelli, Jesus Montero, plus minor league players Cesar Puello, Fernando Martinez, Fautino De Los Santos, Sergio Escalona and Jordan Norberto.