The penalties also include a limit on basketball scholarships for the next two seasons and a reduction in Coach Jim Valvano's staff.
The school was penalized for the way it distributed free tickets to regular season and ACC games and the way it issued basketball shoes to the team.
Valvano said being barred from the NCAA tournament is "as serious a hurt and blow as I have had personally in my life."
But despite the possible loss of revenues--the tournament brought N.C. State $707,000 last year--he said, "We accept the NCAA findings and its punishment."
The NCAA's Committee on Infractions noted the school's cooperation when allegations of possible violations appeared in the book "Personal Fouls." The investigation, which began in January and covered four years, was requested by university officials in response to promotional material for the book.
"This is not a typical major infractions case that we usually deal with," Chuck Smrt, NCAA director of infractions, said at a news conference. "This is not a case where there's academic irregularities. This is not a case where there are cash payments. . . . "
But the NCAA said the case was serious because the violations "were neither isolated nor inadvertent."
The ACC could still bar N.C. State from the league tournament, which gives the winners an automatic NCAA bid.
"They have the right to take that action," said Larry Monteith, N.C. State's interim chancellor. "If they take that action, we won't resist."
The ban on postseason play in the NCAA and NIT tournaments is for this season and 1990-91 season but could be limited to just this postseason if the Wolfpack does not violate probation.
The NCAA said some players received cash and items of value in exchange for tickets in the 1985-86, 1986-87 and 1988-89 seasons. And, it said, several student athletes sold their school-issued shoes during those seasons.
University counsel Becky French said the violations cited would not affect a $500,000 contract buyout clause in Valvano's contract. The clause is negated if Valvano is found to be responsible for major NCAA violations.
"These violations have not named any individual as being guilty of a major violation," she said.
Monteith said he had no immediate plans to fire anyone in the athletics department.