The ICC board, after meeting in London, unanimously decided to freeze funding to the national governing body and ban the southern African country's teams from international events.
"We do not take the decision to suspend a member lightly, but we must keep our sport free from political interference," ICC chairman Shashank Manohar said in a statement on Thursday.
"What has happened in Zimbabwe is a serious breach of the ICC constitution and we cannot allow it to continue unchecked."
Zimbabwe's Sports and Recreation Commission (SRC) suspended Zimbabwe Cricket last month and installed temporary leadership, putting the national cricket board on a collision course with the ICC.
Zimbabwe's absence at Cricket World Cup 'bitter pill to swallow'
The government-run commission acted after alleging corruption in the administration, but the ICC viewed it as government interference, which is against the world body's rules.
The ICC called for Zimbabwe's cricket officials to be reinstated within three months after which the suspension will be reviewed in October, it said.
Zimbabwe failed to qualify for the recent 50-overs World Cup in England, having struggled to schedule matches against major teams in international cricket as their financial position worsened.
The country first became a full ICC member in 1992 and enjoyed an impressive run at the 1999 World Cup, narrowly missing out on a semi-final spot.
Croatia and Zambia were also suspended, while Morocco was expelled for failing to meet ICC's membership criteria.