The NCAA's Division I Infractions Committee released a report on Wednesday that found Kelly and the university failed to monitor the program.
The NCAA has been looking into Oregon's recruiting practices since questions arose over a 2010 payment of $25,000 to Willie Lyles and his Houston-based recruiting service, Complete Scouting Services. Lyles had a connection with an Oregon recruit.
The NCAA also reduced Oregon's official paid visits from 56 to 37 for the next three academic years, reduced its evaluation days for each of the next three seasons and banned the program from using recruiting services during the probation period.
It also placed an 18-month show-cause order for Kelly, which would require schools wishing to hire him to appear before the infractions committee to determine if the school should be subject to the show-cause procedures. Kelly left Oregon this year to become the head coach of the Philadelphia Eagles.
The infractions committee found that Lyles provided cash and free lodging to a prospect, and engaged in impermissible calls and off-campus contact with prospects, their families and high school coaches.
It also said the football program allowed staff members to engage in recruiting activity, exceeding coaching limits.
The NCAA said Kelly was unaware of Lyles' involvement in recruiting, but the committee noted it is the head coach's responsibility to know the rules and ensure staff and coaches comply with them.
Under Kelly, the Ducks appeared in four straight BCS bowl games - including a bid for the national championship against Auburn in 2011. Oregon finished 12-1 last season, capped by a victory over Kansas State in the Fiesta Bowl.
He was replaced by offensive coordinator Mark Helfrich, who will make his debut as head coach on Aug. 31.
Oregon was previously penalized by the NCAA in 2004 for a major violation involving the improper recruitment of a junior college player by an assistant coach. The university was put on probation for two years and the unidentified assistant coach was suspended without pay for a week and restricted from some recruiting activities.
The Ducks remained eligible for postseason play and did not lose any scholarships because of that violation, which occurred in 2003.
Chip Kelly statement
In a statement issued through the Philadelphia Eagles on Wednesday, Kelly said:
"Now that the NCAA has concluded their investigation and penalized the University of Oregon and its football program, I want to apologize to the University of Oregon, all of its current and former players and their fans. I accept my share of responsibility for the actions that led to the penalties.
"As I have I stated before, the NCAA investigation and subsequent ruling had no impact on my decision to leave Oregon for Philadelphia. I have also maintained throughout that I had every intention to cooperate with the NCAA's investigation, which I did.
"I do expect the University of Oregon and its football program to continue to thrive at a high level. They are a talented and resilient group of coaches and players and I'm sure they will attempt to put today's news behind them very quickly and move forward as they prepare for the 2013 season."