Former sumo grand champion Harumafuji has been fined 500,000 yen ($4,400; £3,280) after being found guilty of assault.
The 33-year-old from Mongolia had admitted hitting a junior wrestler over the head with a karaoke machine remote control during a night out in Tottori in October.
He has already apologised and stepped down over the incident.
The case rocked the world of sumo, a hugely popular ceremonial sport.
The assault on fellow Mongolian Takanoiwa happened while they were out drinking with other wrestlers in a bar in the western city.
The grand champion is reported to have been angered that his countryman was checking his phone while being given advice, seeing it as showing a lack of respect.
The latter was admitted to hospital with concussion and a fractured skull.
Two others involved in the incident have faced disciplinary action, and Takanoiwa's stablemaster – as coaches are known – is expected to be demoted for allegedly delaying reporting the incident.
Harumafuji started his career in Japan at the age of 16 and was promoted to grand champion or yokozuna – sumo's highest rank – in 2012.
He released a statement in late December, Reuters reports, saying his life "is now set to be sharply different from what I thought it would be".
"I have a feeling of chagrin, to be honest. But the responsibility is all mine."
What is sumo?
- Japan's much-loved traditional sport dates back hundreds of years.
- Two wrestlers face off in an elevated circular ring and try to push each other to the ground or out of the ring.
- There are six tournaments each year in which each wrestler fights 15 bouts.
- Wrestlers, who traditionally go by one fighting name, are ranked and the ultimate goal is to become a yokozuna (grand champion).
Sumo has been hit by a string of scandals in recent years.
Last year, a wrestler and his coach had to pay nearly $300,000 to a fellow fighter they allegedly abused so badly he lost sight in one eye, according to reports.
Several wrestlers have also been implicated in match fixing scandals and links between sumo and the mafia-like yakuza crime syndicates.
Another Mongolian grand champion retired from the sport in 2010 after reports of his involvement in a drunken brawl.
In 2007 a sumo stablemaster received six years in prison after a novice was beaten to death by older wrestlers.