Egypt's military-backed government has declared the Muslim Brotherhood a terrorist group, criminalising all of its activities.
The interim government also banned any financing of the Muslim Brotherhood and membership to it.
The announcement is a dramatic escalation of the fight between the government and the group, from which the ousted president hails.
The Brotherhood has waged near-daily protests since the military coup that toppled President Mohamed Morsi on July 3.
A man surveys the damage caused by Tuesday's bomb attack
Hossam Eissa, the Minister of Higher Education, read out the Cabinet statement after a long meeting.
He said: "The Cabinet has declared the Muslim Brotherhood group and its organisation as a terrorist organisation."
He said that the decision was in response to Tuesday's bombing of police headquarters in a Nile Delta city which killed 16 people and wounded more than 100.
"Egypt was horrified from north to south by the hideous crime committed by the Muslim Brotherhood group," Mr Eissa said.
"This was in context of dangerous escalation to violence against Egypt and Egyptians (and) a clear declaration by the Muslim Brotherhood group that it still knows nothing but violence.
Brotherhood leader Mohamed Morsi was ousted in July
"It's not possible for Egypt the state, nor Egypt the people, to submit to the Muslim Brotherhood terrorism," he added.
Mr Eissa offered no evidence in his speech linking the Brotherhood to Tuesday's attack.
The Brotherhood, founded in 1928, denounced violence in the late 1970s.
Ibrahim Elsayed, a member of the Muslim Brotherhood's political group, the Freedom and Justice Party, said the government announcement will have no impact on the work or the beliefs of the group.
"This decision is as if it never happened. It has no value for us and is only worth the paper it is written on," he said.
"It won't impact us from near and far. Ideas won't be impacted by false accusations. We uphold this call only for the sake of God."
Ahmed el-Borai, the Minister of Social Solidarity, told reporters in a news conference that the decision means "all activities of the Muslim Brotherhood group are banned including the demonstrations."
The declaration gives the armed forces and the police the right to enter universities and prevent protests, as "protection to the students," Mr el-Borai said.