The IOC said in a statement that it would instead set up a task force to organise the boxing competitions, including the qualification events to be held between January and May.
The recommendations came as the IOC published a 30-page report following an inquiry into the finances and governance of AIBA which has been in turmoil for years.
AIBA says it has undergone a profound reform programme in the last 18 months and done everything that has been asked of it but the IOC said that "there has been a lack of satisfactory progress".
"Today’s decision was taken in the interest of the athletes and the sport of boxing. We want to ensure that the athletes can live their dream and participate in the Olympic Games Tokyo 2020," IOC President Thomas Bach told reporters.
"At the same time, we offer a pathway back to lifting the suspension, but there needs to be further fundamental change.”
The recommendations will be put to a full IOC session in Lausanne in June. The IOC added that AIBA's status should be reviewed after the Games.
AIBA said in a statement that it had "taken note" of the IOC
report and would not make any comments until further clarification is made.
"However, AIBA does look forward to working with the IOC in the future," it added.
The report said that "serious governance issues remain. ....leading to serious reputational, legal and financial risks for the IOC, the Olympic Movement and its stakeholders".
It added that AIBA had been "unable to demonstrate a sustainable and fair management of refereeing and judging processes and decisions, increasing the lack of confidence that athletes can have in fair competitions".
While the IOC organises the Olympic Games as a whole, the federations run their own sports competitions within that framework.
Suspension would rob AIBA of its main source of funding and be a devastating blow to the body which has organised Olympic boxing for 73 years.
AIBA president Gafur Rahimov suspended himself from the post in March because of his presence on a U.S. Treasury Department sanctions list "for providing material support" to a criminal organisation. The Uzbek strongly denies the allegations.
He has been replaced on an interim basis by Mohamed Moustahsane.
The IOC confirmed the total athlete quota for boxing at the Tokyo Games would remain at 286 and the number of eight men’s events and five women’s events would be maintained, as previously approved.
(Reporting by Brian Homewood, editing by Ed Osmond)
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