Earlier this week he warned that playing arcade games had become "an opium'' to the younger generation.
Abdullah Ahmad Badawi, the deputy premier and home minister, said the game centres would be given two months to close.
Earlier this week he warned that playing arcade games had become "an opium'' to the younger generation.
"It has [made] addicts out of the young. They need to go there every day or else they cannot sleep," he said.
"Video games have turned into some kind of gambling activity and will not bring much good."
Financial loss
Malaysia bans gambling for Muslims, who make up more than half the population, and restricts gaming outlets for others.
But the new ban also covers licensed arcades with no gambling facilities.
The owners of the centres which house the arcades said they would meet soon to consider an appeal against the outright ban.
Stanley Kok, spokesman for one of Kuala Lumpur's biggest shopping malls, Sungei Wang Plaza, said a blanket ban would affect many family entertainment outlets.
"It's a huge financial loss as the [arcade] operators have spent millions of ringgit," Mr Kok told the news agency AFP.
"We don't encourage gambling but these [family] centres have car racing and other fun and healthy games."
Pornographic poker
But many state governments are backing the video arcade ban. Reports said some had already ordered power supplies to illegal video arcades to be cut off.
Teachers' union chief N Siva Subramaniam said the tough measures would help curb social ills.
"This is the happiest news to a lot of parents. It will reduce social problems and truancy," he added.
Malaysia's Star newspaper says the favourite video games are "horse racing" followed by "pornographic poker" in which an electronic woman strips when a game is won.