Dyson, who was tied for second place at the halfway stage of the event at the Lake Malaren Golf Club, tapped a spot on the line of his putt with his ball after placing a mark on the eighth green.
Television viewers alerted the Tour of the incident, which should have incurred a two-shot penalty, and the 35-year-old Dyson was subsequently penalised for signing a wrong card, Tour chief referee John Paramor said in a statement.
"When the footage was reviewed, Simon was seen to touch the line of his second putt after marking and lifting his ball on the green," said Paramor.
"He subsequently failed to add a two-shot penalty to his score when signing his card, and as a result has now been disqualified."
The six-time European Tour winner, who was lying in 66th place on the Race to Dubai standings, was informed of the disqualification as he prepared to tee off for his third round.
R & A - Rules of Golf
16-1a - Touching Line of Putt
The line of putt must not be touched except:
(i) the player may remove loose impediments, provided he does not press anything down;
(ii) the player may place the club in front of the ball when addressing it, provided he does not press anything down;
(iii) in measuring – Rule 18-6;
(iv) in lifting or replacing the ball – Rule 16-1b;
(v) in pressing down a ball-marker;
(vi) in repairing old hole plugs or ball marks on the putting green – Rule 16-1c; and
(vii) in removing movable obstructions – Rule 24-1.