The League said its board had unanimously voted to forbid Cellino from completing his purchase of 75 per cent of the second-tier club following his conviction last week of a tax offence.
Leeds, who are thought to be losing £1m a month, responded that they were “disappointed” with the ruling, while Cellino indicated that he would appeal the Football League’s verdict.
“The board agreed unanimously that the decision of the Italian court does constitute a disqualifying condition under its owners’ and directors’ test,” the League said.
“The relevant disqualifying condition being that Massimo Cellino has been convicted of an offence involving acts that would reasonably be considered to be dishonest.”
Leeds, whose owner GFH Capital agreed a sale to Cellino in January, said directors would “continue discussions with the Football League and Eleonora Sport to find a solution suitable to all parties”.
Cellino, who also owns the Italian top-flight side Cagliari, was found guilty last week of failing to pay import duty on a yacht in Sardinia. He was fined £500,000 and had the boat seized.