Bosses apparently decided to take action after feeling 26-year-old Arg's wild partying has spiralled out of control in recent months.
Insiders claim the reality star has been showing up late to filming and, as a result of his behaviour, will not appear in the next few episodes of the ITVBe series.
This comes less than two months after Arg sparked a police manhunt when he failed to turn up to an airport at a scheduled time. Arg was later found asleep in a hotel and apologised for causing such a panic.
More recently, the TOWIE star vomited over himself after drinking too much during a flight to Ibiza, ahead of filming for this series' two-part special, and fellow passengers caught him on video.
A source told The Sun: "[James has] been living in the fast lane for the past four years and the airport incident was worrying.
"He needs to get back on track otherwise he'll be out of a job."
A TOWIE spokesperson confirmed to Reveal: "James has been suspended and won't appear in this week's episodes."
Arg has starred in TOWIE since the show launched in 2010 and, in the early days, spent most of his time in front of the cameras with best friend Mark Wright and girlfriend Lydia Bright.
Over the years, the hapless Essex lad has attempted to lose weight, been left broken-hearted following his split with Lydia and enjoyed some saucy moments with Gemma Collins. Not to mention entertaining his cast mates with singing performances.
More recently, viewers have seen Arg desperately trying to win Lydia back romantically. Just yesterday, Lydia received a surprise bouquet of flowers from him after she had a bad day.
But given this week's suspension, viewers will have to wait to see how their rekindled love story continues to unfold.