The football association handed the team a stadium ban and $22,000 fine over its fans' racist slurs against England players Raheem Sterling, Callum Hudson-Odoi and Danny Rose in a European Championship qualifier last month.
Montenegro will have to play its next home game behind closed doors after England players were racially abused in a European Championship qualifier last month.
As well as ordering Montenegro to play without fans at the June 7 game against Kosovo, UEFA fined the country's soccer federation $22,000 on Friday.
The UEFA Control, Ethics and Disciplinary Body announced Montenegro would also have to display a banner with the wording "#EqualGame" and the UEFA logo on it.
England players Raheem Sterling, Callum Hudson-Odoi and Danny Rose called for tough sanctions after they were abused during the match in Podgorica on March 25.
Rose was subjected to monkey chants and Sterling, scorer of England's final goal in the 5-1 win, was also targeted.
Rose said after the incidents that he "had enough" of racism in stadiums and "can't wait to see the back" of his playing career.
"We hope that their next home match being played behind closed doors sends out a message that racism has no place in football or in wider society," the English Football Association said in a statement. "We will continue to work with the relevant authorities in football to ensure that all players are able to enjoy the game in a discrimination-free environment."
Montenegro's football federation said the punishment from UEFA was the result of "a racist outburst by a small number of thoughtless fans."
European soccer's governing body on Friday also ordered a partial stadium closure for Hungary's next game — with at least 3,000 seats left empty — for racist behaviour in the country's Euro 2020 qualifier in Slovakia in March. UEFA fined the Hungarian federation $20,600 for the racism and other offences by fans.