Liambas was assessed a match penalty for boarding after his hit on Ben Fanelli of the Kitchener Rangers in a game last Friday.
Fanelli's helmet flew off and he fell unconscious to the ice before he was taken to a local hospital in an ambulance. He was later airlifted to Hamilton General Hospital with skull and facial fractures.
Fanelli's condition has been upgraded from critical to serious, but stable.
League commissioner David Branch issued a statement on the suspension after a league review.
"Players must understand they shall be held accountable for their actions," Branch said. "We must all work towards improving the level of respect players have towards opposing players and the game in general.
"It is the position of the Ontario Hockey League that player Michael Liambas of the Erie Otters Hockey Club be suspended for the balance of the 2009-10 playing season including playoffs."
Otters general manager Sherwood Bassin did not return a message requesting comment, but the club posted a statement on the team website and said it considered the matter closed.
"While the team regrets that this stern response was necessary ... we respect the decision," it read. "We would be remiss if we did not note in parting that Mike was a popular teammate and an able contributor to the team in his time with Erie.
"Mike is also an A-plus student with an average in the high 90s, and was a selfless contributor to and very involved with local charities in the Erie area in his time with the Otters. He is an exemplary young man and we wish him well in his future endeavours."
Fanelli is four years younger than the 20-year-old Liambas, who has now played his last OHL game.
Rangers head coach Steve Spott says the length of the suspension was up to Branch, but believes the OHL has sent a message to the rest of the league.
"What I take out of it is players in this league are going to be held accountable for their actions," Spott said from Kitchener. "That speaks volumes to all players in this league that the respect we have to have for all of our opponents has got to be there."
Liambas is a five-foot-nine 200-pounder. Fanelli, who is four inches taller than Liambas but 25 pounds lighter, had one assist in seven games for the Rangers.
Fanelli's teammates were informed of his upgraded status after Tuesday's practice by the player's agent Rob Hooper.
"It was like refrigerators were taken off their shoulders," Spott said. "There were a lot of guys, some more than others, who needed to hear something positive like that."
Fanelli was a candidate to play for Ontario at the World Under-17 Challenge from Dec. 26 to Jan. 4 in Timmins, Ont.
"He's a player that we felt had the opportunity not only to be a great player for Kitchener, but I believe had an opportunity, and I still hope he has an opportunity, to be a professional hockey player," Spott said.
The Rangers travel to Peterborough to play the Petes on Thursday. Erie returns to the ice Friday against visiting Niagara.