The Frenchman was found guilty of failing to abide by UEFA rules surrounding his original ban - imposed after last season's last 16 defeat to Barcelona - after they decided he had passed messages to the dug-out during his side's Champions League play-off first leg against Udinese last week.
UEFA have also fined Arsenal 10,000 euros (£8,743) for the improper conduct of their officials during the match. Wenger and the club have the right to lodge appeals against the decisions.
A statement from UEFA read: "The UEFA control and disciplinary Body has suspended manager Arsene Wenger from carrying out his duties at Arsenal FC's next two UEFA competition matches.
"Today's decision was taken in relation to the Arsenal manager not abiding by the decision of the control and disciplinary body during the English club's Champions League play-off game against Udinese last Tuesday, August 16.
"Wenger is therefore suspended for Arsenal's second-leg match against Udinese in Italy on Wednesday and then the next UEFA competition fixture for which he would be eligible.
"The control and disciplinary body has also decided to fine Arsenal 10,000 euros for improper conduct by its officials. An appeal may be lodged against these decisions within three days of the dispatch of the reasoned decision."
UEFA's statement continued: "The UEFA disciplinary regulations stipulate that a manager may not communicate with his team during a fixture for which he is suspended and may follow the game from the stands only."
Wenger claimed UEFA had told him he was permitted to relay instructions to assistant manager Pat Rice through first-team coach Boro Primorac, who was in telephone contact with the Arsenal bench.
But European football's governing body denied giving Wenger the green light and studied the report from their match officials before deciding to take further action.
Arsenal indicated last week their intention to fight the case and Wenger himself admitted his "surprise" at UEFA's decision to open proceedings against him. It is understood the club intend to appeal against both the Wenger suspension and the club fine.
While Wenger's involvement in the second leg against Udinese on Wednesday looks set to be very limited, it may be that England midfielder Jack Wilshere can play a part after Wenger confirmed he had trained towards the end of last week.