The French champions have been hit with a fine of €60million, and their UEFA Champions League squad will be reduced to 21 players for next season.
Of PSG's fine, €40m will be returned to the club if they comply with the measures set by the Club Financial Control Body (CFCB), and a statement released by UEFA explained that the club had agreed to "significantly limit spending in the transfer market for seasons 2014-15 and 2015-16".
If PSG comply with the break-even targets set by the body, they will "gradually be released from the restriction as regards the registration of players in UEFA club competitions," European football's governing body added.
UEFA explained that the primary objective of the settlement was to make sure that PSG become break-even compliant "in a short space of time".
The statement added: "PSG undertakes to report a maximum break-even deficit of €30m for the financial year ending in 2015 and no break-even deficit for the financial year ending in 2016.
"The compliance with the settlement agreement will be subject to on-going and in depth monitoring, in accordance with the applicable rules.
"In this connection, PSG also undertakes to provide the CFCB with a progress report evidencing its compliance with all relevant conditions agreed on a six monthly basis."
PSG released a statement noting that they accept the measures, "in spite of the tremendous handicap they represent in terms of the club's ability to fully compete on an equal footing against Europe's biggest teams".
Manchester City were the other highest-profile club to be penalised by UEFA, while seven other clubs were also punished.
Turkish giants Galatasaray were among those named, as were their fellow Super Lig rivals Bursaspor and Trabzonspor.
Zenit, of the Russian Premier League, were fined €12m for being in breach of the rules, while Rubin Kazan, Anzhi, and Bulgarian outfit Levski Sofia were all given lesser fines.