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A statement from the German National Paralympic Committee said Ahmet Coskun had tested positive for finasteride after a pre-competition urine test on August 23.
The substance is used in a drug against hair loss and is on a list of banned substances, according to the statement.
It said that although finasteride does not enhance performance, it can be used to cover up drugs that do.
"I was thinking about my hair and had no idea that the drug,which is against hair loss, contained a banned substance. I'm very upset. I never intended to do doping," Coskun said, according to the statement.
German chef de mission Karl Quade expressed regret at the news.
"We take the issue of anti-doping very seriously. We've been carrying out an intensive anti-doping campaign for years in cooperation with Nada (the German anti-doping agency)," Quade said in the same statement.
Coskun, 33, who played for Germany in three of Germany's pool matches but not in Wednesday's 73-63 win over Iran, will return home soon, German paralympic chiefs said.
Pakistani powerlifter Naveed Ahmed Butt, 37, tested positive for the steroid methandienone metabolites on September 4, two days before the opening ceremony, it was announced on Tuesday.
Meanwhile, China sat atop the medals table at the end of competition on Wednesday, boasting 24 golds, and once again leapfrogging Britain.
On 21 golds, the British have been boosted by a remarkable 12 track cycling golds, continuing the domination of the sport they showed at the Olympics.
