Germany will enter a so-called "lockdown light" from November 2, Chancellor Angela Merkel announced on Wednesday.
The "tough" and "country-wide" measures are intended to limit contact as much as possible and stem the rapid spread of the virus, the chancellor said at a press conference, adding that schools and nurseries would remain open.
"We must act, and now, to avoid an acute national health emergency," she said, adding: "If infections continue at this rate, we will be at the limits of the capacities of our health system."
The new measures came as the country's new infections went over a threshold of 50 per 100,000 inhabitants in one week, the government said.
The federal government and the country's 16 state premiers have decided to close restaurants and pubs throughout November, along with cinemas, trade fairs, theatres and fitness centres.
All professional sports competitions in Germany, including top-level football, will be held behind closed doors from Monday and amateur sports activities will not be allowed.
No more than ten people should convene at one time and contact is set to be limited to two households, Merkel said.
The government has advised against "unnecessary, personal trips" to other regions in Germany, such as to see family, and anyone who can work from home should do so.
Nursing home residents will still be allowed to have visitors and shops will stay open with a restriction of one customer per 10 sqm.
Germany will provide up to €10 billion in additional emergency aid to help those who have been financially impacted by the pandemic.
The plan, which media reported on before it was confirmed by Merkel, has caused anguish in Germany’s hospitality industry, with thousands of owners staging a protest at Berlin’s Brandenburg Gate to demand more financial support from the government.
Economists said further restrictions needed to be carefully calibrated to avoid dealing a second severe blow to businesses.
In Germany, where cases have not risen as quickly as elsewhere in Europe, Merkel had urged the state governours to quickly agree on a partial lockdown, saying "every day counts".
But the 16 regional leaders have often not been forthcoming to recognise the gravity of the situation, with Merkel accused of "alarmism" when she said infections could reach over 19,000 by Christmas, but this total is set to become a reality far sooner than December 25.
Germany's new daily infections hit its highest total yet on Wednesday at over 14,000, with just 25% of the country's intensive care beds available.