Legia, which had eased past Celtic 6-1 on aggregate, is weighing an urgent appeal before playoff matches kick off Aug. 19.
Club official Dominik Ebebenge blamed human error for failing to register the player in question for previous qualifying games - meaning those didn't count toward his three-game suspension.
"The proportion between the error and the consequences is unimaginable," Ebebenge told reporters after getting UEFA's verdict one hour before the playoffs draw. "The spirits of the players are broken."
The UEFA decision could potentially cost the club millions of euros (dollars) in Champions League prize money. UEFA pays clubs 2.1 million euros (C$3.1 million) for the playoff round and a basic 8.6 million euros (C$12.6 million) for reaching the group stage.
Celtic was drawn against Slovenian champion Maribor in the two-legged playoffs.
In other matches, Arsenal was drawn against Besiktas of Turkey and two-time European champion Porto plays Lille of France.
A high-class Italy versus Spain clash paired Napoli with Athletic Bilbao. Zenit St. Petersburg was drawn against Belgium's Standard Liege, and Copenhagen faces Bayer Leverkusen.
First-leg matches will be played on Aug. 19-20, and return matches on Aug. 26-27. The 10 playoff winners advance to the 32-team group stage drawn Aug. 28 in Monaco.
Legia, however, was demoted to the second-tier Europa League playoffs, and will prepare to face Aktobe of Kazakhstan ahead of possible appeals to UEFA and the Court of Arbitration for Sport.
On Wednesday, Legia had following up a 4-1 victory in Warsaw with a 2-0 win at Murrayfield in the return leg.
But the Polish side brought on Bartosz Bereszynski as an 86th-minute substitute in the second leg, even though he was suspended for the game.
Because Bereszynski was not registered for the previous qualifying round matches against St. Patrick's Athletic of Ireland, he had not technically served the first two matches of a three-match ban for being sent off in a Europa League match last December.
UEFA said in a statement Friday that "the match has been declared as forfeit."
Celtic was awarded a 3-0 victory for the second leg, meaning the Scottish champion advanced on away goals, with the aggregate score at 4-4.
"I think the pitch showed who is the better team," Ebebenge said. "Financially, it is a disaster for the club. This is absolutely against fair play and the spirit of the game."
An eventual appeal to CAS was a "likely scenario," UEFA general secretary Gianni Infantino told reporters.
"It is never good to have a result not (decided) on the pitch," Infantino said, but added that the rule was clear. "They don't give any space for interpretation even though he (Bereszynski) missed three matches."
It is the second time in four seasons that Celtic has been reinstated in a UEFA competition because of an opponent's legal problems.
In 2011, Sion of Switzerland was kicked out of the Europa League after fielding ineligible players in its playoff-round victory over Celtic.
UEFA increased the frustration for Legia and Bereszynski by adding one match to his suspension, which now still has three games left.