Red Star, who won the European Cup in 1991, have 10 days to appeal against the decision at the Court of Arbitration for Sport (CAS).
UEFA ruled that Red Star were in breach of a number of its Club Licensing and Financial Fair Play rules after looking into a complaint that it was behind on payments.
Red Star won the Serbian league title last month for the first time since 2007.
Slavisa Stojanovic's side would have entered the competition at the second qualifying round stage after pipping city rivals Partizan Belgrade to the title by just one point.
A UEFA statement read: "Serbian champions FK Crvena zvezda (Red Star) have been excluded from the 2014/15 UEFA Champions League for breaching UEFA Club Licensing and Financial Fair Play Regulations.
"The CFCB Adjudicatory Chamber determined that the club were in breach of a number of provisions of the UEFA Club Licencing and Financial Fair Play Regulations.
"Accordingly Crvena zvezda are excluded from participating in the 2014/15 UEFA Champions League for which they had qualified on sporting merit.
"The club have 10 days to appeal this decision before the Court of Arbitration for Sport."
Meanwhile UEFA has barred Turkish clubs Sivasspor and Eskisehirspor from next season's Europa League for involvement in a domestic match-fixing scandal.
Both clubs were implicated in deliberately losing to eventual champion Fenerbahce late in the 2010-11 season.
UEFA rules demand clubs are disqualified from the Champions League or Europa League if match-fixing is proven since April 2007, when tougher rules on corruption were introduced.