The USA national team captain has been handed the severe punishment after he ripped up a referee's notebook during his side's 3-1 fourth round loss to Portland Timbers on June 16.
Dempsey was the third Sounders player to be sent off in the tense affair, which ended in the Timbers scoring twice in extra-time, reacting angrily to the red card shown to teammate Michael Azira.
Dempsey grabbed referee Daniel Radford's notebook and threw it on the ground, which landed him a yellow card, before the match official issued him with a straight red when he picked up the book and tore it up.
For his actions, the former Fulham and Tottenham ace will now be ineligible to play in the US Open Cup for the next two seasons.
"Due to the suspension, Dempsey cannot play in any U.S. Open Cup matches in 2016 or 2017, and possibly longer depending on the number of tournament games in which Dempsey's team participates in those years," said US Soccer in a statement.
The Sounders are the cup holders having won the tournament four times since 2008.