The three-time major winner was called in before the second round to review video replays and accepted his disqualification after acknowledging his ball moved ever so slightly on the seventh green.
"It looks like it's moved," Harrington said. "So I think it's fair enough that the penalty is there on the face of it."
Harrington was in second place after shooting 65 on Thursday.
A television viewer e-mailed European Tour officials to report an infraction.
Under European Tour rules, the ball must be replaced if the coin causes it to move. A failure to do so results in a two-stroke penalty, and Harrington was disqualified for signing the wrong score after putting down a 3.
"You know what, a lot worse things could happen. You could be five ahead going into the last round," Harrington joked. "Yeah, it's disappointing. ... It's an awkward situation."
Germany's Martin Kaymer leads by three strokes after two rounds and is bidding to win this tournament a third time. On a wet, gloomy day, Kaymer shot 7-under-par 65 that put him at 12-under 132.
He is followed by South Africa's Charl Schwartzel, who had 71. U.S. Open champion Graeme McDowell (70) is a shot behind Schwartzel.
Former Augusta State star Oliver Wilson shot 73 and is at 142. Jamie Elson, another ex-Jaguar had 71 and is at 148.
CHAMPIONS TOUR: In Kaupulehu-Kona, Hawaii, Russ Cochran had two eagles and six birdies in a career-best 10-under-par 62 to take the first-round lead in the the tour's season-opening Mitsubishi Electric Championship.
The 52-year-old left-hander, a two-time winner last season, was near-perfect in his bogey-free round on a defenseless day at Hualalai. He has a two-stroke lead over defending champion Tom Watson and Ben Crenshaw.
Augusta native Larry Mize opened with 67, while former Augusta resident Allen Doyle had 71.
NURSE LAWSUIT: A nurse fired from Health Central in Orlando, Fla., after he was accused of looking at Tiger Woods' medical records, has filed a defamation lawsuit against the Ocoee hospital.
David M. Rothenberg is asking for more than $400,000 in damages, reinstatement and a letter from hospital administrators to the medical and nursing staff explaining that he was fired in December 2009 "based on circumstantial evidence," the suit says.
Rothenberg could lose his nursing license based on the hospital's allegations of misconduct.