He was shown the door at Shooshh club in Brighton after some women clubbers complained of being hassled, the Sun reported.
The paper said the 31-year-old Ashes squad spinner urinated from the promenade above the venue onto doormen standing below before he was hauled back to the club where police were called.
He was issued with a fixed penalty notice by police for being drunk and disorderly.
A Sussex Police spokesman said: “A 31-year-old man received a fixed penalty notice for being drunk and disorderly after being seen urinating in public near the Shooshh Club around 4.13am on Monday (August 5).”
Panesar, who plays for Sussex, was part of the 14-man England squad that retained the Ashes at Old Trafford, Manchester, on Monday but he did not play.