USC coach Clay Helton confirmed the NCAA's decision to reporters after Tuesday's practice.
Steele, from St. John Bosco High School in Bellflower, California, committed to the Trojans in July 2018. But then he changed his mind as the Trojans limped to a 5-7 finish; he signed with Florida in January.
Steele's father told the Los Angeles Times that his son left Florida in May because the school initially denied his request to change dorm rooms. Steele's father said the request came before two female students accused his son's roommate, Jalon Jones, of sexual battery.
Both women declined to pursue criminal charges against Jones, and one case was referred to the university's conduct and conflict resolution office. Jones transferred to Jackson State in May.
Steele initially committed to Oregon before enrolling at USC in June, when he filed a waiver with the NCAA for immediately eligibility.
Steele, who was the No. 95 prospect and No. 11 cornerback in the 2019 ESPN 300, is expected to compete for a starting cornerback spot in USC's secondary.
The Trojans must reload their defensive backfield after losing five players with starting experience, including four-year starter Iman Marshall and Isaiah Langley at cornerback. Sophomores Olaijah Griffin and Greg Johnson and redshirt freshman Isaac Taylor-Stuart are also in the mix to replace them.
The Trojans are still waiting to learn whether freshman receiver Bru McCoy -- the No. 1 athlete and No. 27 prospect overall in the ESPN 300 -- will be eligible to play in 2019.
McCoy, from Mater Dei High in Santa Ana, California, signed with USC in January. He transferred to Texas a few weeks later before returning to the Trojans in May because of homesickness.
The Trojans open the season against Fresno State on Aug. 31 (10:30 p.m. ET, ESPN).