Mississippi officials announced Tuesday plans to appeal the ruling, with a response expected in less than one week.
"I'm just shocked and disappointed," Masoli said. "I've done everything I can to follow the rules."
Mississippi athletic director Pete Boone said the decision was "subjective" and expected a successful appeal.
"There is no question in my mind Jeremiah is in the right place," Mississippi coach Houston Nutt said. "We're in the people-helping business. I want to plead with that subcommittee. He's done nothing but what he's supposed to do."
Nutt told ESPN's Joe Schad that he hopes the NCAA will "do the right thing." Nutt said that Masoli has taken every appropriate step since his arrival at Mississippi and was considered for team captaincy after taking a leadership role.
Masoli transferred to Mississippi after being kicked off Oregon's team after two run-ins with police.
He pleaded guilty in a January theft at a fraternity house and was suspended for the entire 2010 season by Oregon coach Chip Kelly. Then in June, he was cited for misdemeanor marijuana possession and dismissed from the squad.
The senior has already completed his undergraduate degree and enrolled in Mississippi's Parks and Recreation graduate program. The NCAA will sometimes waive a one-year residency requirement for athletes who are transferring but enrolling in a graduate program not offered at the previous school.
In a press release, the NCAA said Masoli's request violated the intent of the waiver: "The waiver exists to provide relief to student-athletes who transfer for academic reasons to pursue graduate studies, not to avoid disciplinary measures at the previous university."
Nutt said the NCAA should take into account that Masoli was kicked off only the football team, not the university.
"He was not dismissed from the university," Nutt said. "He was dismissed from the team. I've had players that I dismissed. I want them to go play for somebody else. I want them to learn from their mistakes."
Masoli was expected to compete for the starting spot at Mississippi after leading Oregon to the Rose Bowl last season. He accounted for 51 touchdowns for the Ducks over two seasons.
Now the Rebels are down to two scholarship quarterbacks -- sophomore Nathan Stanley, who Nutt said will start if Masoli's appeal is not successful before Saturday, and junior college transfer Randall Mackey.
Stanley played in five games last season, completing 11 of 23 passes for 163 yards, one touchdown and one interception. Masoli's loss is a big blow for the Rebels, who open the season at 2:30 p.m. Saturday against Jacksonville State in Oxford.
Masoli has not used his redshirt season, so he'll be allowed to practice while sitting out this fall and be eligible for competition in 2011.
Masoli hopes that's not necessary.
"I'm very hopeful the NCAA will do the right thing in my case," Masoli said. "I still have faith."
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