Hizbut's legal status had been revoked to protect national unity, said Freddy Haris, a director-general at the Ministry of Justice and Human Rights.
The decree signed last week by President Joko "Jokowi" Widodo gives the government almost unfettered power to ban organisations deemed against the constitution and the official state ideology known as Pancasila, which enshrines democracy and social justice.
Rights groups say the decree undermines the right to freedom of association and governments could easily abuse its power. But mainstream Muslim groups have supported it.
The measures follow months of sectarian tensions in the world's most populous Muslim nation that shook the government and undermined Indonesia's reputation for practising a moderate form of Islam.
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Hizbut Tahrir, along with groups such as the violent Islamic Defenders Front, was behind a series of massive protests against the Jakarta governor, a minority Christian and Jokowi ally who was accused of blaspheming Islam.
Hizbut, already banned or circumscribed in some countries, is estimated to have tens of thousands of members in Indonesia.
About 2,000 people from Islamic groups protested against the decree in Jakarta yesterday, denouncing the government as repressive and tyrannical, and another protest is planned for today.
Jokowi's top security minister announced in May that the government planned to ban Hizbut but facing the prospect of a lengthy legal battle, Jokowi opted to sidestep courts with the controversial decree.