The Briton had jumped a clear round to secure victory for his team Miami Glory in the Global Champions League event in Cascais before an official from the international governing body, the FEI, made the ruling after examining the 11-year-old chestnut gelding.
The decision elevated Mexico Amigos, boosted by a double clear from Henrik von Eckermann, into first place.
The Valkenswaard United pairing of Marcus Ehning and Bertram Allen were promoted to third place, lifting the team to first place in the overall series rankings after nine rounds.
The controversy surrounding Brash prompted the co-founder of the Global Champions League Jan Tops to suggest the FEI should reassess the blood rule that disqualified the former world No.1 ranked showjumper.
"It was a shame this evening, for what happened with Scott," Tops told the Global Champions Tour website.
"It's a rule, but it's a rule the FEI have to change. I know how much Scott looks after his horses, how great he is with his team of horses, and he didn't deserve that at all. It's a rule but I think these things have to change."
An FEI spokesperson defended the decision by the officials in a statement released to CNN.
"Disqualification under this rule does not imply there was any intent to injure the horse, but the rule is there to protect horses in FEI events.
"FEI officials work on site at all FEI events and one of their roles is to ensure FEI protocol regarding blood on the horse is respected.
"There is no doubt the FEI officials at Cascais handled the situation correctly and acted in full accordance with the FEI jumping rules."
Team owner backs Brash
Miami Glory team owner Georgina Bloomberg said an "almost invisible amount of blood" had been found from spurs marks on the flank of Hello Forever.
"I consider myself the ultimate animal lover and advocate and am the first to stand up for an animal being mistreated," she said in a statement released on social media.
"In this situation I can find absolutely no wrong doing or abuse at all," she added.
The 31-year-old Brash took gold for Britain in the team event at the 2012 London Olympics and is one of the star attractions on the world equestrian tour with several high profile victories. He has not commented publicly on his disqualification.
Global Champions Tour maiden win
Later Saturday, Israel's Danielle Goldstein secured her maiden Longines Global Champions Tour victory on her mare Lizziemary in a a thrilling five-strong jump off under the Cascais lights.
Dutch champion Maikel van der Vleuten and VDL Groep Arera finished second, over a full second behind the speedy Goldstein.
To complete a fine night for young star riders, Martin Fuchs of Switzerland finished in third place on Clooney with Bertram Allen of Ireland on Molly Malone in fourth and Belgium's Jos Verlooyin fifth.
Dutchman Harrie Smolders retained his lead in the overall rankings with van der Vleuten moving up to second after his fine performance in Portugal.
Christian Ahlmann (GER) dropped to third place heading into the 10th round in Chantilly, France.
"It feels great. We come out and we work every day, so it's a dream to win, it feels amazing," said Goldstein.
"I think everyone wants to win a Global Champions Tour Grand Prix, for me it's the top of the list at the moment, so I'm thrilled."