The bloc's leaders said last week that Venezuelan President Nicolas Maduro's socialist government had not adopted 112 resolutions as Venezuelan law.
Member countries Argentina, Brazil, Paraguay and Uruguay have informed Venezuela that its rights as a member "are suspended," the source, who asked not to be named, told AFP.
Mercosur members had already threatened to suspend Venezuela because it has failed to incorporate key Mercosur accords into its national law.
The bloc's leaders said last week that Venezuelan President Nicolas Maduro's socialist government had not adopted 112 resolutions as Venezuelan law, routine procedure for members.
Venezuela has said it can't adopt the text because it conflicts with domestic laws.
Mercosur countries had given Venezuela a three-month period to get up to date on putting the bloc's measures into effect.
Although Venezuela joined Mercosur in 2012, the other members complain it has yet to ratify a number of rules governing trade, politics, democracy and human rights.
Venezuela's neighbors are becoming increasingly wary of developments in the once-booming oil exporter.
Maduro's opponents blame him for an economic meltdown marked by food shortages, riots and looting in the oil-rich country.
Venezuela has been hit hard by the plunge in global prices for its crucial crude oil exports since mid-2014.
The crisis comes at a delicate moment for Mercosur, which has relaunched free-trade negotiations with the European Union.
Tensions between Maduro's government and its Mercosur partners were exacerbated with the election of Mauricio Macri as president of Argentina in 2015 and the replacement of Brazil's ousted former president Dilma Rousseff with Michel Temer. Both right-leaning leaders replaced leftist presidents.
The founding members of Mercosur took over its rotating presidency in September to block Venezuela from the post.
Members of Venezuela's opposition are seeking to drive Maduro from office.
He says the crisis is a US-backed capitalist conspiracy.
Analysts have warned of a risk of violent unrest in the country, where clashes at anti-government riots left 43 people dead in 2014.
Although not explicitly linked to the current crisis, Mercosur's move Thursday was the most significant gesture by a foreign entity against Maduro's leadership since tensions deepened this year.