"We are warning people throughout the region not to go out in the sun between 11am and 3pm," said Lidia Amarales, Chile's health minister.
Health officials said that the radiation levels were currently so high that unprotected skin would burn after just seven minutes in the sun.
The earth's protective layer shields the planet and humans from harmful ultra-violet radiation which can cause skin cancer and destroy tiny plants in the food chain.
Warning
Chile's health officials warned up to 120,000 residents of Punta Arenas city - which is nearly 1,400 miles (2,240km) from the capital Santiago - not to go out in the sun during the day.
"We are warning people throughout the region not to go out in the sun between 11am and 3pm," said Lidia Amarales, Chile's health minister.
"If people have to leave their homes they should wear high factor sun creams, UV protective sunglasses, wide brimmed hats and clothing with long sleeves," said Amarales.
People in this area are used to warnings about high ultra-violet levels.
Some residents of Punta Arenas city and the island of Tierra del Fuego have taken precautions but for others, life has carried on as normal.
"I have to go to buy bread and scarcely have money for that, so forget the sunglasses and suncream," said Adriana Cerpa.
Greenhouse gases
The World Meteorological orgnisation (WMO) said "near total destruction" of the ozone in some layers of the stratosphere had been observed since the middle of September, much earlier than in previous years.
"It's a record. This is the first time we have seen an ozone hole this large in terms of depth," said WMO's senior scientific officer, Dr Michael Proffitt.
The southern-most tip of South America is one of the few areas in the world where people live beneath the hole in the ozone layer.
Every year at this time the ozone hole increases in size, caused in part by low temperatures during the southern hemisphere's winter.