He said such entertainment could "lead to an increase in vice".
Traditional Malay dance also fell under the ban by the Islamic Party of Malaysia (PAS) which rules the north-eastern state of Terengganu.
A PAS official denied a report by a local daily newspaper, The Star, saying that all forms of entertainment had been banned.
"What we don't allow is karaoke and floor shows at nightclubs," said Wan Abdul Muttalib, a state councillor in charge of local government, housing and environment.
He said such entertainment could "lead to an increase in vice".
Some concerts, fashion shows and dance performances would be allowed in hotels "as long as the participants do not overly expose their bodies", he added.
Speaking on the ban on Mak Yong, a traditional Malay dance-drama usually performed by women, he said: "We don't allow [it] because the dresses of the female dancers are revealing."
Tourism concern
Wan Abdul said district councils - which issue entertainment licenses to hotels, clubs and private premises - had been urged to be flexible but cautious.
"They have to observe whether the performances are within the limits allowed by Islam," he said.
He denied the move would hit tourism, saying the state's scenic beauty, beaches and marine life would continue to draw tourists.
Some of Malaysia's most beautiful coral-rich islands are part of the state.
PAS won control of the state from prime minister Mahathir Mohamad's federal government in the general election last year. It also tripled its seats in parliament.
The party benefited from the discontent with the federal government, fuelled by the jailing of former deputy prime minister Anwar Ibrahim.
PAS has held control since 1990 of neighbouring Kelantan state, where it has tried to enforce strict Islamic laws, with women required to follow a dress code and the sale of alcohol curbed.
Kelantan's supermarkets also have separate queues for men and women.
The Terengganu state government announced in March that Muslim women would have to cover their heads. Civic and women's rights groups protested against the move.
The state government has also authorised only eight outlets in the whole state to sell alcohol to the local Chinese community and tourists.