"From today, Algeria has decided to sever diplomatic relations with Morocco," Algerian Foreign Minister Ramtane Lamamra told a news conference on Tuesday.
"Morocco has never stopped acting hostilely against Algeria," he added.
In the midst of an ongoing heat wave, devastating ground fires broke out in Algeria on 9 August.
Tens of thousands of hectares of land have burned and at least 90 people have died in the fires, of which over 30 soldiers.
Algerian authorities claim that most of the fires were started, and thus direct some of the responsibility towards Morocco.
Accusations that the neighboring country denies.
The Moroccan Foreign Ministry writes in a reply that it considers that Algeria's actions are completely unjustified and that the decision is based on false and absurd pretexts.
Several schisms
However, the conflict over the fires is only the latest in a series of schisms between the countries, which have had a strained relationship for decades.
Governments accuse each other of supporting opposition movements in each other's countries, with Morocco outraged that Algeria supports separatists in Western Sahara - which Morocco occupies - while the Algerian government is outraged by its neighbor's involvement in domestic disputes.
"The Moroccan provocation reached its climax when a Moroccan UN delegate demanded that the people of the Kabylia region become independent," Lamamra told a news conference.
Shortly before the ground fires in Algeria broke out, Morocco's King Mohammed VI lamented the tensions between the countries and invited Algerian President Abdelmadjid Tebboune to talks.