Frenchman Anelka, 34, had been charged for making the 'quenelle' sign against West Ham on December 28, which has been described as a "reverse Nazi salute", in tribute to comedian friend Dieudonne.
The independent regulatory commission said in a statement on the FA website that the two charges Anelka faced - that the gesture was abusive and/or indecent and/or insulting and/or improper, and that it included a reference to ethnic origin and/or race and/or religion or belief - were both found proved.
The FA stated: "An independent regulatory commission has found an aggravated breach of FA rule E3 against Nicolas Anelka proven and has issued a five-match suspension and a fine of £80,000, pending appeal."
West Brom, however, have suspended the player immediately until the conclusion of the governing body's disciplinary process and will carry out their own internal investigation, they said in a statement.
"The club cannot ignore the offence that his actions have caused, particularly to the Jewish community, nor the potential damage to the club's reputation," they added.
Anelka argued that the gesture is not anti-Semitic but anti-establishment. However, after months of investigation and careful deliberation, the FA decided that there was a discriminatory element to the sign and have banned the player accordingly.
Importantly, the commission added that it was their finding that Anelka had not been deliberately anti-Semitic.
The commission statement said: "So far as the basis for our finding on Charge 2 is concerned, we did not find that Nicolas Anelka is an anti-Semite or that he intended to express or promote anti-Semitism by his use of the quenelle."
It appears that is why Anelka was banned for five and not 10 matches.
Anelka has the right to appeal, and has also been ordered to attend an education programme. The penalty is suspended until the outcome of any appeal which must be made within seven days.
The FA's decision to charge Anelka caused controversy, with some in France claiming the gesture is not anti-Semitic, even though it has been widely associated with anti-Jewish sentiment.
Conversely, the length of time taken by the FA to charge and suspend the player was also criticised, highlighting the sensitivity of the incident, while Jewish groups believe the FA have been lenient.
"If the FA thinks a five-match ban for making a Nazi salute in the middle of a football field, then it has brought itself into disrepute," Stephen Pollard, editor of the Jewish Chronicle told Sky Sports.
At the time of Anelka performing the quenelle, the European Jewish Congress claimed the former Arsenal and Real Madrid player should be subjected to the same punishment handed out to those who perform a Nazi salute.
French minister for sport Valerie Fourneyron also condemned the gesture as "shocking" and "disgusting".
Anelka has been insistent all along that, on his part, it was an innocent gesture.
He wrote on Twitter in December: "I do not know what religion has to do with this story", adding that "of course I am neither racist nor anti-Semitic".
Dieudonne Mbala Mbala, a French comedian who is friends with Anelka, has been repeatedly convicted of making anti-semitic statements, and has been banned from performing after popularising the 'quenelle', which is named after a dumpling.
Several footballers have been photographed making the sign alongside Dieudonne, including Manchester City's Samir Nasri and Liverpool's Mamadou Sakho, but those instances were in private, with both players insisting they were unaware of its connotations.
Anelka, however, made the gesture during a match, putting it in the FA's jurisdiction, and his comments regarding its meaning imply at least some awareness of its significance.
The FA has been making a strong stand against racism in recent years, following high-profile incidents involving Luis Suarez, and latterly John Terry.
While those players were found guilty of making racial references towards black people, this is the first time a black footballer has been found guilty of a racial offence in England.