Saudi Arabia, Egypt, Bahrain, the United Arab Emirates and Yemen have cut diplomatic ties with Qatar, accusing it of destabilising the region.
They say Qatar backs militant groups including so-called Islamic State (IS) and al-Qaeda, which Qatar has denied.
The Saudi state news agency SPA said Riyadh had closed its borders, severing land, sea and air contact with the tiny peninsula of Qatar.
Qatar called the decision "unjustified" and with "no basis in fact".
The unprecedented move is being seen as a significant split between powerful Gulf countries, who are also close US allies.
It comes in the context of increased tensions between Gulf countries and their near-neighbour Iran. The Saudi statement accused Qatar of collaborating with Iranian-backed militias.
What has happened?
The diplomatic withdrawal was put into motion by Bahrain then Saudi Arabia early on Monday. Their allies swiftly followed.
SPA cited officials as saying the decision was taken to "protect its national security from the dangers of terrorism and extremism".
The three Gulf countries have given Qatari nationals two weeks to leave their territory.
In the latest developments:
The UAE has given Qatari diplomats 48 hours to leave the country. Abu Dhabi accuses Qatar of "supporting, funding and embracing terrorism, extremism and sectarian organisations," state news agency WAM said
UAE airlines Etihad Airways, Emirates and Flydubai said they would suspend all flights to and from Qatari capital Doha from early Tuesday, local time
The Gulf allies said they had closed their airspace to Qatar Airways
Bahrain's state news agency said it was cutting its ties because Qatar was "shaking the security and stability of Bahrain and meddling in its affairs"
The Saudi-led Arab coalition fighting Yemen's Houthi rebels also expelled Qatar from its alliance because of its "practices that strengthen terrorism" and its support to groups "including al-Qaeda and Daesh [IS], as well as dealing with the rebel militias", according to SPA.
What is the context?
While the severing of ties with
Two weeks ago, the same four countries blocked Qatari news sites, including Al Jazeera. Controversial comments purportedly by Qatari emir Sheikh Tamim bin Hamad al-Thani criticising Saudi Arabia appeared on Qatari state media.
The government in Doha dismissed the comments as fake, attributing the report to a "shameful cybercrime".
Back in 2014, Saudi Arabia, Bahrain and the UAE withdrew their ambassadors from Qatar for several months in protest over alleged interference in their affairs.
More broadly, there are two key factors driving Monday's decision: Qatar's ties to Islamist groups, and the role of Iran, Saudi Arabia's regional rival.
While Qatar has joined the US coalition against IS, the Qatari government has been forced to repeatedly deny accusations from Iraq's Shia leaders that it provided financial support to IS.
However, wealthy individuals in the emirate are believed to have made donations and the government has given money and weapons to hardline Islamist groups in Syria. Qatar is also accused of having links to a group formerly known as the Nusra Front, an al-Qaeda affiliate.
The SPA statement accused Qatar of backing these groups, as well as the widely-outlawed Muslim Brotherhood, and that it "promotes the message and schemes of these groups through their media constantly".
Saudi Arabia, a Sunni majority country, also accused Qatar of backing Shia militants in Bahrain and in the eastern Saudi province of Qatif. Qatar has repeatedly denied ties to Iran in the past.
While on a visit to Riyadh two weeks ago, the US President Donald Trump urged Muslim countries to take the lead in combating radicalisation, and blamed Iran for instability in the Middle East.