Anyone can set up a YouTube channel and post videos, but the company only lets certain prominent creators into its special program for advertisers.
Paul -- whose channels have a combined 20 million followers -- will also be booted off "Foursome," a web series in which he appeared previously. That show airs on YouTube Red, the site's premium subscription service. The company also said a YouTube original movie he was slated to appear in, "The Thinning: New World Order," has been put "on hold."
At the heart of a scandal is a video Paul posted more than a week ago that showed a corpse hanging from a tree in Japan's Aokigahara forest, also known as "suicide forest."
The video was widely seen, and many users were outraged. Paul took the video down and apologized, saying he "didn't do it for the views."
"I did it because I thought I could make a positive ripple on the internet, not cause a monsoon of negativity...I intended to raise awareness for suicide and suicide prevention and while I thought 'if this video saves just ONE life, it'll be worth it,' I was misguided by shock and awe, as portrayed in the video. I still am," he said in a statement posted to Twitter.
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YouTube also issued a statement last week.
"Our hearts go out to the family of the person featured in the video. YouTube prohibits violent or gory content posted in a shocking, sensational or disrespectful manner. If a video is graphic, it can only remain on the site when supported by appropriate educational or documentary information and in some cases it will be age-gated," the statement read.
At the time, YouTube issued a "Community Guidelines strike" against Paul. Channels that receive three such strikes in a three-month period can be barred from the platform.
But the company faced further backlash for not taking stronger punitive action against Paul.
YouTube hinted Tuesday that it planned to change that.
"It's taken us a long time to respond, but we've been listening to everything you've been saying," the company said in a series of tweets. "We know that the actions of one creator can affect the entire community, so we'll have more to share soon on steps we're taking to ensure a video like this is never circulated again."
YouTube's upload-anything-anytime ethos is constantly being challenged as videos containing graphic or inappropriate content continue popping up on the platform. The company has at times struggled to enforce its policies prohibiting violent and gory videos.
Last week, YouTube said graphic videos are only permitted to remain on the site if they offer "educational or documentary information."
In the same statement, YouTube said it "acted accordingly" in response to Paul's post.