Nation Mirror editor Simon Aurelious said officials from the National Security Service gave no clear reason for the closure, simply saying "the paper is indulging in activities incompatible with its status."
"We were called today to the office of the National Security and after reaching there they showed us an order. The order is instructing us to close down," Aurelious told AFP.
The paper's headlines today and yesterday focused on a report released in Washington this week about the alleged implication of President Salva Kiir, rebel chief Riek Machar and the country's army chiefs in corruption during the nation's three-year civil war.
One of the Nation Mirror headlines read "Kiir, Machar and top Generals implicated in Sentry Report" while another said "Machar's source of weapons uncovered."
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The government has denied the report as "completely rubbish".
Aurelious said security authorities two weeks ago summoned him and demanded the paper's management produce the author of a critical piece on the government.
But the Nation Mirror refused to give the writer's name.
In February last year the paper was shut down by government security agents for nine months after publishing details on the activities of rebels affiliated to Machar.
Alfred Taban, a veteran South Sudanese journalist who is chairman of the country's Association for Media Development, AMDISS, said the latest decision "is shocking news."
"We are yet to check with the Media Authority as to why they (National Security) are doing this," Taban said.
Taban spent 13 days in detention in July after writing an editorial sharply critical of Kiir and Machar.
The government rejected the idea.