The 30-year-old was banned by the Court of Arbitration for Sport on Tuesday despite not testing positive for drugs.
The charges were brought by the US Anti-Doping Agency based on evidence gathered in the Balco laboratory case.
"I have retired," he said. "The process was totally not fair. From where I come from, you need a positive test."
Montgomery, whose ban expires in the summer of 2007, has denied ever "knowingly" taking a banned substance.
LAUSANNE, Switzerland (AP) -- Tim Montgomery, the former 100-meter world record holder, was suspended for two years on Tuesday for doping.
I ran track in University and high school and hate to see stories like this. I am glad that they do get caught, though many more do not. I know that it is tough at the world class levels but I do not think that steroids are worth the risk. Look at Flo Jo, I believe that steroids were the cause of her death.
Another U.S. sprinter, two-time Olympic relay medalist Chrystye Gaines, also received a two-year ban from the Court of Arbitration for Sport in Switzerland.
Both runners were implicated in the Bay Area Laboratory Co-Operative scandal although neither sprinter tested positive for drugs.
The U.S. Anti-Doping Agency sought the bans based on documentary evidence gathered in the BALCO criminal probe.
USADA had requested four-year suspensions for both runners, but CAS -- the highest court in sports -- cut the penalty in half.
The bans began retroactively on June 6, 2005.
In addition, all of Montgomery's results and prize money since March 31, 2001, and Gaines' performances since November 30, 2003, were annulled.
That means Montgomery's former world 100-meter record is wiped off the books.
He ran 9.79 seconds in Paris in September 2002. The record has since been broken by Jamaica's Asafa Powell, who clocked 9.78 on June 14 in Athens, Greece.
CAS said it based its ruling in part of testimony from Kelli White, a former world sprint champion who was suspended for two years in 2004 in the BALCO case.
White testified that Montgomery and Gaines both admitted to her that they used a prohibited substance provided by BALCO.
"The panel unanimously found that Ms. White's testimony was both credible and sufficient to establish that the athletes had indeed admitted to have used prohibited substances in violation of applicable anti-doping rules," CAS said.
The panel said Montgomery and Gaines both declined to testify at their hearings.
Analytical evidence
USADA can ban athletes without a positive doping test if there is other sufficient "analytical" evidence.
The agency reviewed thousands of documents seized by federal investigators looking into the BALCO case.
The San Jose Mercury News published details last year of a plan Montgomery and BALCO founder Victor Conte came up with in 2000 to turn him into the world's fastest man.
The plan -- "Project World Record" -- allegedly called for Montgomery to take THG, the previously undetectable steroid at the heart of the BALCO case.
Montgomery and Gaines were among dozens of athletes who testified in 2003 before a federal grand jury in San Francisco probing BALCO.
Gaines was also implicated in the Bay Area Laboratory Co-Operative scandal
Montgomery testified that in 2001 Conte gave him weekly doses of human growth hormone and a substance called the "clear," the San Francisco Chronicle reported in June 2004. That substance was later unmasked as TGH.
Last month, Conte began a four-month prison sentence in California for orchestrating an illegal steroids distribution scheme.
Montgomery is the boyfriend of Marion Jones, the former three-time Olympic champion, who has been investigated by USADA, but has not been charged.
Former world champion sprinter Michelle Collins, who never tested positive, accepted a four-year suspension in May for using banned substances provided by BALCO.
She was stripped of her titles in the 200 from the 2003 world indoor and U.S.
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