The ban restricts the sale of beer and pre-mixed drinks -- such as spirits with soft drinks -- to large supermarkets only, outlawing sales in the country's 16,000 minimarts and 55,000 other small shops. Hotels, restaurants and bars are unaffected.
There had been particular anxiety about how the ban might affect tourism on the Hindu-majority resort island of Bali.
However, Trade Minister Rachmat Gobel -- who was shouted at during an ill-tempered meeting with community leaders in Bali last weekend -- has now pledged to ease the restrictions on the island to ensure street vendors can still sell beer at the beach.
Convenience stores in the capital Jakarta began pulling booze from their shelves weeks ago in anticipation, replacing chilled beers and bourbon and cokes with signs apologising to customers for the inconvenience.
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Very few small retailers can stock unmixed spirits and wine, meaning the regulation has been viewed as an an attempt to completely ban alcohol sales at such outlets.
German traveller Daniel Kowalski told AFP he tried to buy a beer from a convenience store on Jakarta's backpacker strip only to learn they no longer stocked alcohol.
"I think tourists will not appreciate it. Everybody likes to have a beer," he said. "Some people may actually say 'well I can't have a beer, I'd rather go to Thailand'."
The trade ministry has justified the ban on sales at small retailers on health and moral grounds, as concerns grow that underage drinking is being fuelled by wide availability in local neighbourhoods.
Lawmaker Fahira Idris, the founder of the National Anti-Alcohol Movement and a leading proponent of the measure, likened alcohol to a "machine killing our youth".