The decision, which was announced by IOC president Thomas Bach after a meeting of his executive board on Wednesday, comes after a six-month investigation into the crisis-hit federation.
AIBA has been on the ropes for several years as it has struggled to answer questions about its finances, governance and refereeing standards but its relationship with the IOC reached a new low when it elected Gafur Rakhimov as president last November, despite the Uzbek being on a United States sanctions list for alleged involvement with a global crime network.
Rakhimov has denied the US allegations and repeatedly blamed AIBA's current difficulties on his predecessor C K Wu, who ran against Bach for the IOC presidency in 2013.
But with pressure mounting on him and his federation, Rakhimov eventually stood down in March and was replaced by interim president Mohamed Moustahsane.
If AIBA had hoped that would be enough to placate the IOC, they were rudely disabused of that notion in Lausanne, where Bach told reporters there will be an Olympic boxing competition in Tokyo but AIBA will have nothing to do with it.
Furthermore, he said, the IOC's executive board was recommending AIBA's suspension - a decision based on the findings of the inquiry he set up in November and will be rubber-stamped at next month's IOC Session.
"These decisions were taken in the interest of the athletes and the sport of boxing," he said.
"We want to ensure, on the one hand, that the athletes can continue to live their Olympic dreams...while at the same time drawing the necessary consequences for AIBA following the recommendation of the inquiry.
"We have offered a pathway back for lifting the suspension after Tokyo 2020 but for this, there must be further fundamental change within AIBA."
Asked what this will mean for the thousands of boxers around the world hoping to win a place at the Games, Bach said: "This is good news because now they will know there will be a boxing tournament in Tokyo...and they will know there will be a safe and fair competition where all the athletes will have an equal chance".
In a statement, GB Boxing agreed with Bach's assessment.
A spokesperson added: "All of the boxers, coaches, and staff at GB Boxing have worked hard to ensure the uncertainty has not got in the way of our preparations for the Games and as we enter the final stages of the Olympic cycle, everyone will continue to work hard and do everything we can, on a daily basis, to give our boxers the best possible chance of being successful at Tokyo 2020."
This message was backed by British Olympic Association chair Sir Hugh Robertson, who told PA Sport: "It is incredibly important for boxing, both at elite and community level, that it retains its status at the Olympic Games.
"We welcome this decision, not least for the male and female boxers that are working hard towards qualification to Tokyo 2020."
With AIBA benched, the IOC has asked the president of the International Gymnastics Federation, Japan's Morinari Watanabe, to lead a task force that will organise the boxing qualifiers and competition in Tokyo.
This will include confirming the weight categories, quota allocations, and qualification events, which are scheduled to take place between January and May next year.
On why Watanabe has been given this job, Bach said it was because of his links with Tokyo 2020's local organising committee, his expertise in organising Olympic competitions and his understanding of the importance of "refereeing and fair judgement", which AIBA was deemed to have not delivered at Rio 2016.
While the IOC's move is unlikely to have a negative impact on the boxing competition next year, it does pose grave problems for AIBA itself, which still cannot open any bank accounts in Switzerland because of Rakhimov's American difficulties, is struggling to find new sponsors and faces an indefinite period without IOC funding.
Bach said he hoped this was a "unique experience" and the IOC would never again have to deal with such "an agglomeration of issues with a federation" but it is entirely possible that AIBA will now start legal action against the IOC.
It, however, has not yet responded to a request for comment or said what its next move will be.
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