Following in the wake of Jake Livermore’s positive test for cocaine, Baxter has been found with traces of MDMA in his blood after a random test by the FA.
Baxter made seven appearances for Everton before joining Oldham Athletic in 2012.
A statement, issued by Sheffield United, read: “The club has learned that one of its players, Jose Baxter, was found to have traces of a banned substance in his sample following a routine Football Association out of competition drug test.
“The player has informed the Club that he engaged in no wrongdoing involving any banned substance.
“The club will offer no further comment at this stage.”