"I want to fight to prove my innocence because I don't remember (taking the drug) and it's incomprehensible", Saito said in a statement after returning a positive test for a banned diuretic.
He has also agreed to leave the Olympic Village as part of his provisional suspension, which is being reviewed by the Court of Arbitration for Sport.
"I have never considered doping".
Saito, who won a bronze medal in the 3,000-meter relay at the 2013 World Junior Championships, was tested after training on February 4, the day the short track team arrived in PyeongChang, the Japanese Olympic Committee said Tuesday.
The case will no doubt embarrass Japan, organisers of the Summer Games in 2020, and again forces the drug issue to the fore after Russian Federation were formally banned for state-sponsored doping. "I have no merit and motivation for using this drug".
According to a source who previously worked as a staff member for the Japanese team at a Winter Olympics, Saito was listed as an alternate for the 5,000-meter relay and there was the high probability even before the CAS announcement that he would not have competed in Pyeongchang.
Saito is yet compete at the Pyeongchang Games, and as such no results have been affected by the doping violation.
The athlete said he was stunned by the finding.
Saito, a human biology student, also participated in the Winter Youth Olympic Games in 2012, when he placed fifth in the 500m, fourth in 1,000m and seventh in Relay X.
Japan's short track speed skating head coach Tsotomu Kawasaki said he was "suprised and dismayed" by Saito's positive test.
"Final decisions rendered by the CAS ADD may be appealed before the CAS ad hoc Division in Pyeongchang or before the CAS in Lausanne after the end of" the Olympic Winter Games.
In January, Yasuhiro Suzuki, a Tokyo Olympic hopeful in kayaking, spiked a fellow competitor's drink with an anabolic steroid and now faces a lifetime ban.