The Jamaican sprinter, 31, tested positive for the stimulant oxilophrine at last year's national championships and the ban has been backdated to June 21 2013 - the day he provided the sample. His ban will end on Dec 20.
Powell said he would lodge an appeal against the decision.
"This ruling is not only unfair, it is patently unjust," he said in a statement.
The chairman of the three-member disciplinary panel, Lennox Gayle, said: "The panel arrived at a unanimous decision, and it is a decision that in all the circumstances Mr. Powell was found to be negligent and that he was at fault, especially in light of the fact he (is) an elite athlete.
"It is our decision that the period of ineligibility will be 18 months commencing from the date of the sample collection ... the period will expire on the 20th of December 2014."
Powell added: "Panels such as these, I understood, were assembled to allow athletes who, consciously or unconsciously, come into conflict with the rules of sport a chance at equitable redemption. Unfortunately, this was not the case.
"This is the first time in nearly 12 years of being in the sport and over 150 tests that I have had an adverse finding. It is for a stimulant, a stimulant that is only banned during competition and experts have declared has no performance enhancing effects.
"Sanctions for a stimulant and this kind of infraction usually range from public warnings to a ban of three months, six months in the most extreme cases; I was and am still more than prepared to accept a sanction that is in line with the offence. Instead, nine months later, what has been handed down is clearly not based on the offence nor the facts surrounding it.
"My team has begun preparations for an appeal to the Court of Arbitration for Sport in Switzerland.
"I want to reiterate that I have never knowingly taken any banned substances."
Powell's sanction comes two days after his former training partner Sherone Simpson received an 18-month suspension from the same panel for the same substance.
Another Jamaican, Olympic discus thrower Allison Randall, was also handed a two-year ban for using the prohibited diuretic hydrochlorothiazide on Tuesday.
Powell was not at the hearing but his lead attorney, Kwame Gordon, told Reuters: "We are disappointed that having had two months to review the matter and provided all the evidence, we have no written reasons and the sanction would imply that the athlete is being held at a certain standard.
"It would have been, I think, appropriate if the panel had applied the same standard to themselves and provided us with written reasons."
Powell, who missed last year's world championships as a result of his failed test, had testified in January that Canadian physical trainer Chris Xuereb provided him with nine supplements, including Epiphany D1.
Xuereb denied providing performance enhancing drugs and said the sprinters should take responsibility for their failed dope tests.
Powell, twice a 100m world championship bronze medallist, said: "As an athlete, I took a legal supplement - Ephiphany D1. As it turns out, that supplement was contaminated with oxilofrine.
"My team commissioned two private laboratories that confirmed that oxilofrine was present in the supplements, despite it not being listed as an ingredient on the bottle nor on its website.
"I would also like to share that upon realising that the supplement contained oxilofrine, my team made contact with both the World Anti-Doping Agency (WADA) and the United States Anti-Doping Agency (USADA), who not only ordered samples of the supplement from the manufacturer but also tested and confirmed our findings.
"USADA has also since issued a warning on their website for athletes to avoid the product as it contains banned substances.
"I did all the necessary checks before taking Ephiphany D1, and it is my hope that the CAS will prove to be a more open and fair avenue for the review of all the facts in my case."
IAAF spokesman Chris Turner declined to comment on Powell's punishment, saying only: "This is a legal process following IAAF rules which are in accordance with those of WADA and the IAAF does not comment until cases are closed.
"This case concerns an international athlete and the full, reasoned decision of the member federation has to be sent to the IAAF and considered by the doping review board."
- Sports & Recreation