ECOWAS "has decided to suspend Guinea from all of its decision-making bodies," Burkina Faso's Foreign Minister Alpha Barry said after the leaders from the 15-member bloc discussed the crisis in a video summit.
Barry said the bloc called on the coup leaders to release detained President Conde and urged Guinea "to put in place a process that will allow a rapid return to normal constitutional order."
ECOWAS is expected to send a mediation mission to Guinea's capital, Conakry, on Thursday.
Ahead of the virtual meeting, ECOWAS condemned the coup and threatened sanctions.
There are fears the military takeover in Guinea could further destabilize West and Central Africa, which has seen a spate of coup attempts and electoral disputes, as well as heightened activity by Islamist militants in the past few years.
"I think everyone in the region is worried that we might be returning to the dark days of the military coups," said Kojo Asante, the director for advocacy and policy engagement at the Ghana Center for Democratic Development.
Although the number of military power grabs has declined in the past two decades, West and Central Africa have experienced the highest number of coups in Africa since countries on the continent started gaining independence in 1951.
ECOWAS 'toothless bulldog'
"If ECOWAS does not succeed with the impasse in Guinea, a dangerous precedent could be in the making that could encourage and embolden other would-be coup plotters in other member countries to take a similar path," warned the Liberian Observer, a news site.
The leader of the Guinea's coup, Col Mamadi Doumbouya, has promised to form a "new government of national union" but gave no timeline for when this would happen.
Despite early threats, ECOWAS ultimately gave in to the Mali junta's timeline for holding new elections, accepting an 18-month delay after earlier saying that democracy had to be restored within a year.
"As we have seen in Mali, the tools [ECOWAS has] are not biting," governance specialist Asante told DW from Ghana's capital, Accra. "They are not efficacious enough to deal with it, to first of all stop it happening and then return these countries to normal rule."
ECOWAS has also come under fire for standing by while Guinea's 82-year-old president, Alpha Conde, made the constitutional changes that allowed him to stand for a third term in 2020 elections despite a two-term limit.
Conde's was Guinea's first democratically-elected president in 2010 and he was re-elected five years later. But his push for a third term triggered widespread protests in the capital, Conakry and he won the 2020 election amid allegations of large-scale fraud.
"When Conde's third mandate was happening right in the region, [ECOWAS] kept quiet," Liberian international relations expert Mamadou Bah pointed out. "Now they are coming out to speak. But who will listen to them with the jubilation that you saw in downtown Conakry [after the coup], with the average citizens lining up in the streets, even people kissing soldiers."
Bah told DW that ECOWAS "looks like a toothless bulldog in the sense that they don't have any leverage besides limited sanctioning power."
Guinea's close ties to Liberia and Sierra Leone
As news of the coup broke, one of the biggest concerns was the impact on the brisk trade and the movement of people along Guinea's long borders with Sierra Leone and Liberia.
The three countries, which have strong historical, cultural and economic ties, form the Manos River Union and thousands of people cross back and forth from Sierra Leone and Liberia to Guinea daily.
Liberia depends on Guinea for many basic commodities such as pepper, onions and clothing, as well as used vehicles. Similarly, Sierra Leone has a strong volume of trade in agricultural goods with Guinea.
According to Freetown-based journalist Murtala Kamara, panic buying has started in Sierra Leone amid fears prices of basic goods could skyrocket as they did last year when Guinean authorities closed the border because of the coronavirus pandemic.
The borders from Guinea to Liberia and Sierra Leone are currently open, although they were temporarily closed immediately after the military take-over.
People and goods are again flowing over long land border between Liberia and Guinea, confirmed DW journalist Evelyn Kpadeh Seagbeh in Monrovia.
She reported that Liberia's President George Weah has ordered an increase in the presence of national security forces along the 590 km (367 miles) border to Guinea.
The Guinea coup could also impact million dollar deals such as the proposal to ship bauxite and iron ore mined in Guinea from Liberia's Port of Buchanan.
Evelyn Kpadeh Seagbeh in Movrovia and Murtala Kamara in Freetown contributed to this article.