"[Labour] Minister Ghazi al-Qusaibi decreed a new law that bans all sorts of trading in people, including selling working visas and charging (illegal) fees for providing entry and exit visas," said the official news agency SPA on Saturday.
The new rule also bans "inhuman and immoral treatment" of workers.
The move comes after Human Rights Watch said on Thursday that foreign workers in Saudi Arabia were being systematically abused and exploited with some of them said to be living in conditions akin to slavery.
Discrimination against women in the kingdom compounds the plight of female workers, some of whom have been victims of sexual abuse and forced confinement, the group claimed.
Asians form the bulk of foreigners in Saudi Arabia, who according to al-Qusaibi number 8.8 million.
New law bans "inhuman and immoral treatment" of workers
Saudi Labour Minister
This compares to an indigenous population of about 17 million people.
Saudi Arabia is often assailed by Western rights groups for alleged abuses.
The kingdom denies the charges and has announced plans to set up a government rights body and recently formed a National Human Rights Association.