Al Hilal were "deemed to have withdrawn from the competition" after failing to name the required 13 players for their AFC Champions League (West) Group B match against Shabab Al Ahli Dubai.
The Asian Football Confederation said in a statement that under the "special rules applicable to AFC Competitions during the Covid-19 pandemic" the Saudi giants, who had already qualified for the last 16, will not be able to take any further part in the competition.
"All matches played by Al Hilal, who named only 11 players, are considered null and void" the AFC said.
As a result, Pakhtakor of Uzbekistan and Shabab Al Ahli Dubai progress to the Round of 16 from Group B.
Competition regulations allowed for 35 players to be registered by each club, but Al Hilal registered 30 of which only 27 travelled to Doha in the beginning of the competition.
Al Hilal and the Saudi Arabian Football Federation (SAFF) had asked for the postponement of the match against Shabab Al Ahli Dubai, citing an AFC rule allowing for a delay "in exceptional circumstances".
But their request was turned down as a postponement "would have a huge negative impact on the current match schedule of the AFC Champions League (West)".
Al Hilal played Iran's Shahr Khodro on Sunday despite 15 of their players testing positive for coronavirus, after Asia's football body refused to postpone the game.
The Saudi team had "asked the Asian Football Confederation to postpone" the match at Qatar's Al Janoub stadium after tests showed that ten players had "been infected with Covid-19", adding to five players who had already tested positive.
According to AFC rules, Al Hilal were still able to play the match as 14 of their players were available, including two goalkeepers.
Al Hilal won the title beating Uruwa Red Diamonds of Japan in the final last year.