The suspension will have no impact on his star colt's attempt to win the Belmont Stakes in New York on June 9 because the ban does not kick in until at least three weeks after the big race.
The California Horse Racing Board slapped O'Neill with a 45 day suspension after another of his horses, Argenta, tested positive for excessive levels of carbon dioxide after finishing eighth in a race in August 2010.
The Board had originally charged him with a much more serious offence of "milkshaking", or giving his horse a mixture of bicarbonate of soda, sugar and electrolytes to run faster.
O'Neill always denied any wrongdoing and after an investigation, the board agreed there was no evidence against him to support the charge.
"The Hearing Officer, who conducted a seven-day hearing, agreed with O'Neill that the evidence demonstrated that Argenta had not been milkshaked, so milkshaking was not the cause of the TCO2 overage," the Board said in its ruling.
"He also determined there were no suspicious betting patterns in the race. He further determined there was no evidence of any intentional acts on the part of O'Neill in connection with this incident."
Despite clearing O'Neill of the more serious charge, the Board imposed a 45-day ban for the elevated carbon dioxide levels, which can be a sign of doping.
"I'm gratified that the CHRB found that I did not "milkshake" a horse or engage in any intentional conduct that would result in an elevated TC02 level," O'Neill said.
"I plan on examining and reviewing all of my options following the Belmont Stakes, but right now I plan on staying focused on preparing for and winning the Triple Crown."
The board said it was not sure when the ban would start but it would not be at least until July 1.
That clears O'Neill to saddle up his star colt in the Belmont Stakes, the final leg of the Triple Crown.
I'll Have Another won the first two legs, the Kentucky Derby and the Preakness Stakes, in brilliant fashion to remain on course to become the first horse in 34 years to win the holy grail of U.S. thoroughbred racing.