CFL commissioner Jeffrey Orridge said Mitchell violated the league's social media policy.
"There is absolutely no place in our league for commentary used to divide or disparage others along the lines of sex, race, religion or sexual orientation," Orridge said in a statement.
"While we acknowledge that players have a right to hold and express their own opinions, in no circumstance do we condone activity or comments that are derogatory or inappropriate, putting the League's reputation in question — and we feel Mr. Mitchell's recent posts on social media have violated these principles."
Alouettes president and CEO Mark Weightman said the team denounced Mitchell's online posts.
"His postings are disappointing and in no way reflect the opinions and values of the Montreal Alouettes Football Club," said Weightman. "His postings were completely unacceptable and the Alouettes apologize to anyone who was offended by them."
He said the team fined Mitchell the maximum allowed under CFL rules, also for violating the team's social media policy.
B'nai Brith Canada alerted the Alouettes and the league to a series of tweets sent recently by Mitchell. It said Mitchell's Twitter feed was "replete with bizarre postings and outlandish conspiracy theories, comparisons of police officers to the Ku Klux Klan and hateful videos denying the Holocaust."
"As an all-star and role model for Canadian youth, Mr. Mitchell should not be sending out divisive and hateful tweets under the banner of the Montreal Alouettes organization,” said Michael Mostyn, CEO of B'nai Brith Canada. "Mr. Mitchell has a history of posting wacky and offensive tweets."
In 2012 the CFL fined Mitchell an undisclosed amount for violating the league's social media policy for using derogatory terms against people of Chinese descent.
Among Mitchell's tweets was one with a link to a video called "The Greatest Lie Ever Told, the Holocaust."
The six-foot-six lineman signed with Montreal last season from the B.C. Lions. The Virginia Beach, Va., native was a CFL all-star in 2011.