This comes days after the security forces launched a crackdown on separatist groups in the state and arrested several leaders of Jammer-e-Islami, in the wake of the February 14 Pulwama terror attack in which 40 CRPF personnel were killed.
The group was banned Thursday as an unlawful association under the Unlawful Activities (Prevention) Act for alleged anti-national and subversive activities, officials said.
A notification on the ban was issued by the Ministry of Home Affairs (MHA) after a high-level meeting on security, chaired by Prime Minister Narendra Modi.
In the notification the Centre stated it is of opinion that Jamaat-e-Islami is in close touch with militant outfits and is supporting extremism and militancy in Jammu and Kashmir and elsewhere.
The separatist group is alleged to be involved in anti-national and subversive activities in the country.
The Central government is of further opinion that if unlawful activities of JeI are not curbed immediately, it is likely to escalate its subversive activities.
Days ago, government had launched a massive crackdown on separatists and detained over 150 people, mainly from the Jamaat-e-Islami Jammu and Kashmir, including its chief Abdul Hamid Fayaz, ahead of a hearing in the Supreme Court on Article 35-A of the Constitution.
The development, coupled with other administrative measures, triggered a "war hysteria", prompting people in Srinagar and other parts of Kashmir to stock up on groceries and essentials and buy petrol for their vehicles.
Though police had termed the action as routine saying that leaders and potential stone pelters have been picked up in the past, officials privy to the development said this was the first major crackdown on the Jamaat-e-Islami, coming days after the Pulwama terror attack in which 40 CRPF personnel were killed.