"The ministry has asked the management of the foundation to close its doors and dismiss its personnel," with immediate effect, the official, requesting anonymity, said on Tuesday.
Al-Haramain figured among a number of Saudi charities accused by Washington of "financing terrorism" after the 11 September 2001 attacks.
A senior Saudi official said in June that Al-Haramain and other private groups would be dissolved or have their international operations and assets folded into a new Saudi National Commission for Charitable Work Abroad.
Adil al-Jubair, foreign affairs adviser to Crown Prince Abd Allah bin Abd al-Aziz, said the commission would be "subject to strict financial legal oversight, and will operate according to clear policies to ensure that charitable funds intended to help the needy are not misused".
His remarks followed an announcement by Riyadh in February that it would set up a body that will be the sole authority in running charity work abroad.
The US Treasury Department said at the time al-Jubair made his announcement that five additional branches of Al-Haramain would be placed on a "terrorism blacklist" because of "financial, material and logistical support they provided to the al-Qaida network and other terrorist organisations".
Al-Haramain officials say the charity received between $45-50 million each year in donations and has spent some $300 million on humanitarian work overseas.
Al-Haramain was initially set up in Karachi, Pakistan, in 1988 by Aqil al-Aqil.
Under US pressure, the Saudis
have clamped down on charities
He served as director until Saudi authorities removed him last year after the United States accused him of funding terrorism and put his name on a list of "terrorism financiers", a charge he denied.
Aqil had moved the charity's main office to Riyadh and the institution at one point had more than 5000 employees, most of them volunteers, according to charity officials.
But 14 of its branches abroad were closed in the wake of the US accusations and its employees dwindled to 250.
After Aqil was removed, the charity came under the authority of the minister of Islamic affairs and was headed by Dabbasi bin Muhammad al-Dabbasi, who resigned three months ago after the charity's operations were effectively frozen.
He was in turn replaced by Hajjaj al-Arini, a retired army officer.
Under pressure from Washington, Saudi Arabia has taken measures to clamp down on what the US calls suspect money dealings.
It has also launched a massive crackdown on suspects blamed for attacks in the kingdom since May 2003.