The Court of Arbitration for Sport in Lausanne made the announcement Tuesday.
Both American sprinters were implicated in the U.S. federal investigation into the Bay Area Laboratory Co-Operative in California. Neither athlete had tested positive for drugs.
BALCO's co-founder, Victor Conte, was sentenced to four months in prison last October after pleading guilty to distributing steroids.
Tim Montgomery was one of two American sprinters slapped with a two-year doping ban by the Court of Arbitration for Sport on Tuesday. (AP File Photo)
The U.S. Anti-Doping Agency wanted four-year suspensions for Montgomery and Gaines based on evidence gathered in the BALCO probe, but the CAS – the highest court in sport – cut that request in half.
The bans began retroactively on June 6, 2005.
Montgomery will also have to forfeit all of his results and prize money since March 31, 2001. That includes his former world 100-metre record of 9.78 seconds that was set in Paris in September 2002.
The record has since been broken by Jamaica's Asafa Powell, who clocked 9.77 on June 14 at an event in Athens.
Last year, the San Jose Mercury News reported that Montgomery's rise from unheralded sprinter to world's fastest man was the result of a secret project led by BALCO.
The plan, dubbed "Project World Record," was purportedly born in the backrooms of the lab's offices in late 2000 by Conte and Canadian track coach Charlie Francis.
It involved a drug-enhanced training regime for Montgomery to help the American sprinter break the world 100-metre record and in turn help promote BALCO's legal nutritional supplement ZMA, according to the Mercury News report.
Montgomery testified that in 2001 Conte gave him weekly doses of human growth hormone and a substance called the "clear," the San Francisco Chronicle reported in June 2004. The "clear" was later identified as tetrahydrogestrinone or THG, a previously undetectable designer steroid.
Gaines, a three-time world relay champion, will have her performances since Nov. 30, 2003 erased.
The CAS said it partly based its ruling on testimony by Kelli White, a former world sprint champion who was suspended for two years in 2004 in the BALCO case. She testified that Montgomery and Gaines admitted to her that they used a prohibited substance provided by the lab.
"The panel unanimously found that Ms. White's testimony was both credible and sufficient to establish that the athletes had indeed admitted to have used prohibited substances in violation of applicable anti-doping rules," the court said.
The panel said Montgomery and Gaines declined to testify at their hearings.
The USADA can ban athletes without a positive doping test if there is other sufficient "analytical" evidence.
The anti-doping organization reviewed thousands of documents seized by federal investigators looking into the BALCO case to form its cases against Montgomery, Gaines, White and other athletes.
Among those athletes was former world indoor champion sprinter Michelle Collins, who also never tested positive, but accepted a four-year ban in May for using performance-enhancing drugs provided by BALCO.
Three-time Olympic champion Marion Jones, Montgomery's girlfriend, has also been under investigation by the USADA, but has never been charged. She vehemently denies ever taking banned substances.
with files from Associated Press
