The governing body's ethics committee made the decision on Saturday after a two-day hearing.
Bin Hammam was accused of attempting to buy votes ahead of last month's Fifa presidential election.
The 62-year-old Qatari withdrew from the election, leaving Sepp Blatter to be re-elected unopposed.
The decision makes Bin Hammam the most senior figure to be banned by Fifa in its 107-year history.
The former head of the Asian Football Confederation is now unable to be involved "in any kind of football-related activity at national and international level for life", Fifa ethics committee deputy chairman Petrus Damaseb said on Saturday.
In a statement, Bin Hammam's legal council said he will continue to fight the case through every legal route available to him.
The statement added: "The Fifa ethics committee has apparently based its decision upon so called 'circumstantial' evidence which our case has clearly demonstrated was bogus and founded on lies told by a senior Fifa official.
"We have strictly observed the legal rules regarding the confidentiality of these proceedings and not shared our evidence, which is compelling, with the media.
"Fifa, either directly or through third parties, appears to have done the opposite with selective and continual leaking of documentation that has been part of these proceedings to the media in order to influence public opinion and create bias.
"We are confident of the strength of our case and invite Fifa to make available now to the media a full transcript of these proceedings."
Bin Hammam, along with former Fifa vice-president Jack Warner, was suspended after a leaked report revealed four Caribbean Football Union (CFU) associations were either offered money, or saw the offence occur, during a meeting in May.
It was alleged that cash-stuffed envelopes containing up to $40,000 (£25,000) were handed to the delegates during the meeting in Port of Spain, Trinidad and Tobago.
The report said there was "comprehensive, convincing and overwhelming" proof that bribes had been paid to officials to support Bin Hammam's campaign for the Fifa presidency, and that Warner had facilitated this.
Warner's resignation from Fifa last month meant he did not have to face the ethics committee.
Two further officials from the CFU, Debbie Minguell and Jason Sylvester, were each banned from football-related activity for a year for their involvement in the bribery attempt.
In a blog post on Friday, Bin Hammam raised fears that he would not recieve a fair trial at the hearing.
"It seems likely that Fifa has already made its decision weeks ago," he wrote.
"So none of us should be completely surprised if a guilty verdict is returned."
Before the hearing, Bin Hammam suggested he would be compelled to appeal if the committee found him guilty of the charges.
"Rest assured that justice will eventually prevail whether through the Fifa ethics committee, the Court of Arbitration for Sport or if necessary, through other courts or legal proceedings in courts where we will be equal and no special privileges will be granted to either party," he wrote.
The ethics committee has now asked Fifa's legal department to prepare cases against Caribbean football leaders who are suspected to have knowingly covered up the instances of Bin Hammam's bribery attempts.
Surprised? A populist measure or a genuine attempt to clean up the blackhole of fuckery that is FIFA?