Oxford City Council voted unanimously last night to permanently remove the honour given to 72-year-old Suu Kyi in 1997.
"Today we have taken the unprecedented step of stripping her of her city's highest honour because of her inaction in the face of oppression of the minority Rohingya population," Councillor Mary Clarkson said.
"We hope that today we have added our small voice to others calling for human rights and justice for the Rohingya people," she said in a statement.
Last week, Myanmar signed a deal with Bangladesh to allow the refugees to return home.
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While the United Nations has described the violence and mass exodus as "a textbook example of ethnic cleansing", Suu Kyi has dismissed all allegations.
Oxford City Council said that when Suu Kyi had been given the Freedom of the City it was because she reflected the city's values of "tolerance and internationalism" and as a celebration of her opposition to oppression and military rule in Myanmar but now any association with her would tarnish the city's reputation.
"Oxford has a long tradition of being a diverse and humane city, and our reputation is tarnished by honouring those who turn a blind eye to violence," it added.
A series of UK institutions have been distancing themselves from the Nobel Peace laureate in the wake ofthe Rohingya crisis.
Aportrait of the leader hanging prominently at the entrance of St Hugh's College, Oxford University, where she studied was moved into storage back in September.
So far, Oxford University has decided not to reconsider an honorary doctorate bestowed upon Suu Kyi in 2012 but has expressed its "profound concern" over the treatment of the Rohingya minority in Myanmar.
At the start of November, musician and Love Aid founder Bob Geldof returned his Freedom of the City of Dublin award because it was also held by Suu Kyi.
The City of London Corporation has also been debatingrevokingSuuKyi's Honorary Freedom, bestowed upon her earlier this year.