Non-essential shops will close across the country from Wednesday, as will schools, with children to be cared for at home wherever possible.
Chancellor Angela Merkel blamed Christmas shopping for a "considerable" rise in social contacts.
The latest figures showed 20,200 more infections and a further 321 deaths.
The new lockdown will run from 16 December to 10 January. Announcing the move after meeting leaders of the country's 16 states, Mrs Merkel said there was "an urgent need to take action".
Restaurants, bars and leisure centres have already been closed since November, and some areas of the country had imposed their own lockdowns.
Under the national lockdown, essential shops, such as those selling food, will stay open, as can banks. Outlets selling Christmas trees can also continue trading. Hair salons are among the businesses which must close.
Companies are being urged to allow employees to work from home.
Care homes will be authorised to carry out coronavirus tests. New Year events and the sale of fireworks will be banned.
Drinking of alcohol in public places, such as popular mulled wine stalls, is also forbidden.
Finance Minister Olaf Scholz said affected businesses would receive up to 500,000 euros (£457,000, $605,000) in government support per month.