Rangers, in bankruptcy protection because of tax debts exceeding $30 million, is now set to visit grounds with seats for just a few hundred fans next season.
"Clearly, starting again from the bottom league is not ideal and makes the task of rebuilding Rangers a longer one, but the SFL was placed in an impossible situation and I respect its decision," Rangers manager Ally McCoist said.
"I am very comfortable with the decision that has been made today because it has been based on the most important aspect of what the Scottish Football League stands for; sporting fairness. We have applied those principles in the past, so I am comfortable that the decision has been made with sporting fairness as key issue."
Rangers, Scottish champion a record 54 times, was barred last week from returning to the SPL and hoped to restart in the next tier, the first division — but that option was rejected by the majority of clubs outside of the topflight.
"I am comfortable that the Scottish Football League has made a very decisive decision," said David Longmuir, chief executive of the body for the 30 clubs outside of the SPL.
But the Glasgow club's fate in the fourth tier might not be final.
Rangers remained hopeful of an SPL 2 being introduced that would see the Ibrox outfit return to the topflight within a season.
"It is now understood that on the back of a briefing SPL chief executive Neil Doncaster and SFA counterpart Stewart Regan gave to clubs last week that the SPL will introduce a plan for SPL 2 — which would include Rangers — and invite existing division one members to join," Rangers said on its website.
There remains a financial concern for the remaining clubs in the SPL.
Without the world famous rivalry between Celtic and Rangers, there's a worry the SPL will lose money in television revenue.
The repercussions of Rangers' financial meltdown have seen the club banned from European football for three years, and the loss of many of its best players.