The opposition blasted the decision as a means to silence opponents, claiming the oil-rich Gulf state was increasingly becoming a police state.
"The information ministry has scrapped the licence of a satellite station for violating the terms of the licence and after failing to meet a deadline to rectify its situation in line with the law," the ministry said, quoted by the official KUNA news agency.
Al-Youm chairman Ahmad Al-Jabr confirmed to AFP via an SMS text message that the channel had received orders to shut, and the station went off the air immediately.
Mohammad al-Daas, general manager of the channel, which was set up more than a year ago, said it would challenge the decision in court.
"Al-Youm channel has received a letter from the information minister scrapping the station's licence with immediate effect. The station will seek recourse in court against this unfair decision," Daas said on Twitter.
The station has broadcast programmes sympathetic with the opposition.
It interviewed many leading opposition figures in the run-up to a December 1 parliamentary election, and after the results were announced.
Several leading opposition figures and former lawmakers condemned the decision.
"By combating corruption and exposing it, you have agitated the forces of corruption and parties which are opposed to the constitutional system," prominent opposition leader and former MP Ahmad al-Saadun said on Twitter.
A member of the scrapped parliament, Mohammad al-Kundari, said "the closure of Al-Youm channel is completing the measures of silencing people and confiscating the freedom of expression... Have we really become a police state?"
Former Islamist MP Jamaan al-Harbash said the decision is an act of "tyranny."
The Islamist, nationalist and liberal opposition, angry over an amended electoral law, has since been staging protests almost every night to demand the dissolution of the parliament.
On many occasions, the demonstrators were dispersed by riot police which used tear gas and stun grenades. Scores of youth activists have also been arrested and face trial.