The ARU has opted to reduce the number of teams in the competition from 18 to 15 and the Perth-based outfit is among those being culled.
South African sides Cheetahs and Kings have also lost their place but will play in the Pro14 in the upcoming campaign.
Issues over falling revenue and spectator numbers are said to be behind the decision and the ARU have outlined their disappointment at having to make the tough call, which was "guided primarily by financial outcomes".
"This is a sad day for rugby, especially for Western Force fans," ARU chairman Cameron Clyne said. "We accept that there will be anger and resentment over this decision and we sympathise with those fans. We sincerely hope that they are not lost to the game forever."
However, Rugby Western Australia is refusing to take the news lying down and will look to the courts to try and stay in the competition.
"Rugby WA is considering all options including bringing urgent proceedings in the Supreme Court and legal action relating to the circumstances which led it to enter into the alliance agreement with the ARU," they said in a statement.