The new stricter restrictions will take effect on Monday 2 November and will apply until the end of November.
Restaurants and gyms will be closed, as well as cinemas, theaters and other entertainment venues, reports the news agency Reuters.
The decision also applies to public sporting events, including Bundesliga football will be played without spectators.
However, schools and preschools will keep teaching open.
The virus threatens healthcare
Shops will continue to be open during the closure, but the number of people allowed to stay on the premises at the same time will be limited to one per ten square meters.
Chancellor Angela Merkel says that the health care capacity cap will have been reached within a few weeks if the number of new cases of covid-19 continues to increase at the same rate as now.
A maximum of ten people can hang out
Social life is also affected by the restrictions.
A maximum of ten people from two different households may socialize at the same time.
Angela Merkel urges residents not to travel within the country, unless it is necessary and hotels will not receive tourists either.
Only guests with necessary reasons for the stay are allowed.