The Italian Olympic Committee's anti-doping prosecutor, Ettore Torri, opened an investigation.
Cannavaro, who helped Italy win the World Cup in Berlin three years ago, was already suspended for the country's World Cup qualifier with Ireland on Saturday due to accumulated yellow cards. But he was expected to join the team for Wednesday's game against Cyprus.
CONI would not say when Cannavaro tested positive, but said Torri would hold a hearing with the defender and the physician involved in the case.
Torri will likely want to determine if Cannavaro had a certificate approving use of the substance. The hearing with Cannavaro could come as early as Friday.
Cannavaro received a cortisone injection Aug. 29 to prevent an allergic reaction, the ANSA news agency reported, quoting the Italian football federation. That was shortly before Cannavaro joined Italy's team for World Cup qualifiers against Georgia and Bulgaria
The federation said the national team's medical staff was also informed of the injection, and that a certificate had been sent to CONI.
In 2005, a video was shown on Italian TV of Cannavaro getting injected with a performance-enhancing substance the night before the 1999 UEFA Cup final.
The sequence was shot in a Moscow hotel room, shortly before his Parma team beat Marseille 3-0 for the title.
The substance was Neoton, a creatine phosphate, that was not on any banned lists in Italy at the time.