The decision was taken at the first cabinet meeting presided by Chief Minister Arvind Kejriwal.
"No minister or official in Delhi government will use red beacon," a senior official in the Delhi government said after the meeting.
The cabinet also decided that no Personal Security Officer and escort vehicle will be be provided to any official.
"Security is to be allowed based on threat perception," the official said.
In its manifesto, AAP had promised to end VIP culture in Delhi.
"I have asked them to work with honesty," he said. There were apprehensions among certain bureaucrats, who were close to the previous regime, that they may be targeted by the new dispensation.