Communications Minister Ayoub Kara alleged that the channel supported terrorism, and said both its Arabic and English-language channels would be taken off air.
Israeli Prime Minister Benjamin Netanyahu accuses the broadcaster of "incitement".
Al Jazeera has condemned the decision.
The Israeli government said it was basing its decision on a similar ban by several Sunni Arab states, amid their diplomatic rift with Qatar, which hosts and funds Al Jazeera.
