Persepolis defender Mohammad Nosrati grabbed the backside of his team-mate Sheys Rezaei while celebrating his team's goal in a league game Saturday against Damash Gilan.
Although both players insisted the gesture was made out of fun, the Iranian football federation FFI disciplinary committee suspended both players on charges of 'immoral offence' until further notice.
The FFI said in a statement that more players involved in the incident might be suspended as well.
Nosrati was earlier suspended until further notice by Persepolis, which is the most popular club team in Iran and financed by the government.
Rezaei was suspended by his club for at least for two games, while both players have had their wages cut by 15 per cent.
'Nosrati has been in the national team for eleven years but for us that this does not count when it comes to breaking social and ethical taboos in such an ugly manner,' a spokesman of Persepolis club told ISNA.
The long-time manager of Persepolis, Mahmoud Khordbin, was fired because he had seen the incident but didn't report it to the club and the federation, ISNA reported.
The incident during a match broadcast live on TV and watched by millions throughout the country was regarded as a scandal in Islamic Iran, although many fans also saw it as a harmless celebration.
The FFI has for many years tried to bring what it calls 'social values' into domestic football. But despite its efforts, vulgar slogans continue to be chanted by fans in the stadiums while there are often harsh confrontations over refereeing decisions.
Due to the alleged vulgar atmosphere, Iran has also banned woman from attending matches despite a huge number of female football fans in the country.