FIFA's ruling, which came after the intervention of Donald Trump, permits Balogun to play in the co-hosts' last 16 match with Belgium later on Monday.
"Yesterday’s decision to suspend for a probationary period of a year the implementation of the one-match automatic suspension following the red card issued to the player Folarin Balogun crossed a red line," read UEFA's statement.
"Football, like any other sports, relies on rules, which are the basis for fair, honest and transparent competition. Sometimes rules are open to interpretation. In this case not."
UEFA warned of the ramifications for the sport as a whole.
"Football is the most loved sport in the world because it is a beautiful game and is trusted because is played everywhere with the same laws," it said.
"A tournament is never a pure standalone and, if the tournament in question is the World Cup, it has the power to drive positive or negative consequences on the game as a whole.
"We express our disbelief at such an unprecedented, incomprehensible and unjustifiable decision."
Balogun, who has scored three goals at the World Cup, had been set to miss the clash in Seattle after receiving a straight red card following a video review for stepping on a Bosnia-Herzegovina defender's foot in the round-of-32 match the US won 2-0.
Under FIFA rules, a straight red card automatically triggers a one-game ban.
Trump called FIFA chief Gianni Infantino asking him to review Balogun's punishment, two sources familiar with the matter told AFP.
US Secretary of State Marco Rubio also publicly called for the card to be rescinded.
The decision to suspend the ban was taken by FIFA's disciplinary committee.
World football's governing body said Sunday the ban will now be suspended for a year, in a stunning move for which no specific explanation was offered.
"Thank you to FIFA for doing what was right, and reversing a great injustice!" Trump wrote on his Truth Social platform.
The Belgians were stupefied by the ruling.
"I didn't know that at the FIFA World Cup, the 5th of July is now the 1st of April, and that it's April Fool's Day," Belgium coach Rudi Garcia told reporters.
FIFA World Cup 2026
The 2026 World Cup is taking place from June 11th to July 19th in the United States, Canada and Mexico. The tournament features 48 national teams and is played at 16 modern stadiums.
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