The five member panel voted 3 to 2 in favour of handing the governor the yellow card.
They were acting on five complaints filed by Pheu Thai Party members and voters in March last year.
The complaints asked the agency to probe whether several senior Democrat Party members violated local election law by slandering Pheu Thai candidate Pongsapat Pongcharoen during the campaign to help MR Sukhumbhand canvass for votes and beat his primary opponent in the poll.
A source close to the EC said the decision to yellow-card the Bangkok governor was mainly based on the petition by former senator Ruangkrai Leekitwattana.
Mr Ruangkrai’s complaint accused ex-Democrat MPs Suthep Thaugsuban and Jurin Laksanavisit of delivering political speeches at three public venues that claimed the so-called Thaksin regime was trying to change the country’s administration into a presidential system, and that Pheu Thai and the red-shirts were part of its movement.
The alleged defamation was based partly on an article written by retired police general Vasit Dejkunchorn, deputy chairman of an organisation for transparency in Thailand.
The EC will forward its probe results to Court of Appeal Region 1. The court will then make a final decision on whether to have the results of the gubernatorial election nullified and call a re-run of the poll.
Election Commissioner Somchai Srisuthiyakorn said MR Sukhumbhand would have to stop performing his duty as soon as the Court accepted the case for deliberation. His deputy Pussadee Tamthai would take charge of City Hall's top job pending the court's ruling.
“The case is not involved with criminal prosecution or seeking compensation for the poll re-run because no red card is issued and the case does not implicate the candidate [MR Sukhumbhand] directly.” Mr Somchai said.
The EC’s Tuesday resolution would set a precedent for elections at all levels that candidates must refrain from slandering their opposition and campaign in a more constructive manner, he added.
MR Sukhumbhand said it was a pity that the EC took almost a year to rule on the allegations that had nothing to do with him at the helm of political turbulence in the country.
However, he said he respected independent organisations and the Courts of Justice.
“It does not matter who will be Bangkok governor," he said. "I am not worried about myself, I am worried about the work, because I did not do anything wrong.”
Democrat Party leader Abhisit Vejjajiva said his party accepted the EC's decision, but insisted the case centred on political addresses related to Pheu Thai made by former party members. Offences were not committed by the governor, he said, adding that the court may rule against the EC findings.