China will stop importing key North Korean goods such as coal, iron ore and fish.
China has been an ally of North Korea, but the relationship has been tested by Pyongyang's repeated missile launches and nuclear tests.
Now, China has decided to implement sanctions agreed by the UN Security Council last weekend. It will ban the imports of select goods, effective from tomorrow.
The decision will be particularly damaging for North Korea, because China is the biggest importer of North Korean goods.
The news comes after North Korea and the US traded threats last week, with Pyongyang saying it was readying an attack on Guam, a US military base in the Pacific.
Joseph Dunford, the most senior general in the US army, has said America is also preparing strikes against North Korea. He said the US would take action if its diplomatic efforts with the North Koreans fail.