The move by the government comes a week after at least 55 anti-government protesters were killed at a religious festival.
A state of emergency was declared in Ethiopia on Sunday following months of anti-government protests.
The move comes a week after clashes between anti-government protesters and police resulted in the deaths of 55 people at religious festival in the Oromiya region.
The incident triggered a wave of violence in which dozens of state and foreign-owned factories were destroyed and vehicles torched.
Prime Minister Hailemariam Desalegn said the six-month state of emergency was put in place because the prevailing tensions in the country "posed a threat against the people of the country".
"We put our citizens' safety first. Besides, we want to put an end to the damage that is being carried out against infrastructure projects, education institutions, health centers, administration and justice buildings," said Desalegn on the country's Fana Broadcasting Corporation.
Ethiopia is facing its biggest anti-government unrest in a decade, from the majority Oromo and Amhara ethnic groups which feel marginalised by a minority-led government.
The declaration of a six-month state of emergency, though, is unprecedented in the 25 years the current Ethiopian government has been in charge.
Internet access has been restricted in recent days to prevent protesters from using social media to get supporters to attend demonstrations.
Roads into and out of the capital, Addis Ababa are blocked by protesters. Residents of the capital and regional towns reported more police on the streets but little change.
The anti-government demonstrations began in November in the central Oromia region, Ethiopia's biggest ethnic group, then spread to Amhara in the north, the second most populous group.
The unrest was initially over land rights, they later broadened into calls for more political, economic and cultural rights.
The protesters accuse the country's leaders, who largely hail from the northern Tigray region, which makes up only 6 per cent of the population of monopolising power.
The government though blames rebel groups and foreign-based dissenters for fueling violence.
International rights groups estimate at least 500 demonstrators have been killed since the protests began.