The city's Secretary for Security John Lee announced the ban on the Hong Kong National Party in a brief statement published in the government's gazette, 10 days after the party submitted arguments against the move.
Lee ordered the ban under Hong Kong's Societies Ordinance, a previously little noticed colonial-era law that requires all social groups and organizations to register with the police.
The law allows the government to ban groups "in the interests of national security, public order or the protection of the rights and freedoms of others".
Lee later told reporters that the two-year-old group was prepared to use "all methods" to forge independence, which posed a threat to national security and broke the Basic Law, the mini-constitution that governs Hong Kong's relations with China.
"It has a clear agenda in making Hong Kong a republic," Lee said.
Lee also said the group had spread "hatred and discrimination against mainland Chinese".
The authorities could not rule out action against other groups, including those promoting "self determination" as well as full independence, he said.
Hong Kong's nascent independence movement shows little sign of generating widespread public support but the government's move in July to announce it was considering a ban on the Hong Kong National Party propelled its leader, Andy Chan, to prominence.
Hong Kong is governed under a "one country, two systems" principle which allows the global financial hub a high degree of autonomy and freedoms not enjoyed in China, including an independent legal system and freedoms of speech and assembly.
The 28-year-old Chan has been widely quoted in local and international media in recent weeks. In August, he spoke at Hong Kong's Foreign Correspondent's Club, a move condemned by the Chinese Foreign Ministry and locally-based Chinese officials.
"I will never stop in my pursuit of freedom, human rights, equality and dignity," Chan told Reuters earlier.
Chan declined to comment when contacted by Reuters. Some media reports said he was considering a legal appeal.
Local government efforts to find ways of cracking down on the independence movement follows a warning last year from President Xi Xinping during a visit to the city that any attempt to endanger China's sovereignty crossed a "red line".
China's perceived tightening grip over the city has stoked tensions in recent years, including the "Occupy Central" movement in 2014 that blocked major roads for nearly three months in a failed bid to pressure Beijing to allow full democracy.
(Reporting By Greg Torode and Clare Jim in Hong Kong; Editing by Michael Perry)