Calhoun was cited by the NCAA on Tuesday for failing to create an atmosphere of compliance within his program and was suspended for the first three Big East games during the 2011-12 season.
The NCAA also hit UConn with scholarship reductions for three academic years, recruiting restrictions, permanent disassociation of a booster and three years probation.
As a part of the disassociation of the booster, not named in the report, the university will not be able to accept financial contributions, recruiting assistance or provide him with any benefit and privileges.
"We think the penalty is appropriate," said Dennis Thomas, chairman of the Committee on Infractions. "The head coach should be aware, but, also in the same frame, the head coach obviously cannot be aware of everything that goes on within the program. However, the head coach bears that responsibility."
Thomas said Calhoun will serve the suspension next year because UConn could appeal the decision.
"I am very disappointed with the NCAA's decision in this case," Calhoun said. "My lawyer and I are evaluating my options and will make a decision which way to proceed. In the meantime, I will not make any further statements about the case as our program prepares for what I hope will be an exciting and successful postseason."
The NCAA and the school have been investigating the program since shortly after a report by Yahoo! Sports in March 2009 that former team manager Josh Nochimson helped guide recruit Nate Miles to Connecticut, giving him lodging, transportation, meals and representation.
As a former team manager, Nochimson is considered a representative of UConn's athletic interests by the NCAA and prohibited from giving Miles anything of value.
"We cited the head coach for not being on top of these issues with the agent, the booster," Thomas said. "The head coach stated that the booster was a member of the family during his days as team manager."
The school said it found that the basketball staff exchanged more than 1,400 calls and 1,100 text messages with Nochimson between June 2005 and December 2008.
Members of the coaching staff also provided 32 impermissible complimentary tickets to individuals responsible for teaching or directing activities with prospective student-athletes.
Miles was expelled from UConn in October 2008 without ever playing for the Huskies.
Nochimson was attempting to become an NBA agent.
The school imposed sanctions on itself, including reducing scholarships from 13 to 12 for the 2010-11 and 2011-12 academic years. It also put itself on probation for two years.
The NCAA also tacked on scholarship reductions from 13 to 12 for 2012-13.
"When we submitted our response to the NCAA Committee on Infractions acknowledging violations in the men's basketball program, we immediately self-imposed a series of penalties and corrective measures that are included as part of the NCAA Committee on Infractions report," UConn athletic director Jeffrey Hathaway said. "We are disappointed that the committee determined that additional penalties needed to be imposed."
Two members of last year's basketball staff, Beau Archibald, the director of basketball operations, and assistant coach Patrick Sellers lost their jobs after allegations they provided false and misleading information to NCAA investigators.
The Division I Committee on Infractions levied a two-year show-cause penalty on Archibald.
The report states Hathaway said Calhoun's pursuit of Miles was the "most intense" he has ever seen him recruit a player.
Calhoun had admitted mistakes were made, but insisted he was not a cheater.
This was the first time the program has received a letter from the NCAA accusing the school of major violations. Calhoun turned sleepy UConn into an elite program, winning two national championships and 575 games in 24 years.
Thomas said a postseason ban was considered, but the committee was not swayed because the case involved a high-profile coach and program.
UConn will be on probation from Feb. 22, 2011 through Feb. 21, 2014.
Calhoun can't be present in the arena during his suspension where the games are played, nor have contact with the coaching staff or athletes during the games.
The program is banned from recruiting calls during the 2011-12 academic year until 30 days after the first day that phone calls are allowed. The number of men's basketball coaches allowed to make phone calls was cut from three to two, not including the head basketball coach, for six months after the university's response to the notice of allegations.
UConn also faces a reduction of the number of men's basketball off-campus recruiting days by 40, from 130 to 90, for the 2010-11, 2011-12 and 2012-13 recruiting periods.