The President also singled out refugees from Syria as barred from entering the country indefinitely, or until he himself decides they are allowed in.
No visas will be issued to immigrants from seven mainly-Muslim nations including Syria, Iran, Iraq, Libya, Somalia, Sudan and Yemen for 90 days.
"I'm establishing new vetting measures to keep radical Islamic terrorists out of the United States of America. Don't want them here," Trump said earlier on Friday at the Pentagon.
"We only want to admit those into our country who will support our country and love deeply our people," he said.
Trump claimed the move would keep America safer, despite evidence which shows none of the countries on the list have been the source of terror attacks on US soil since 9/11.
Having given no notice of the ban, it caused chaos for thousands of Arab-American families who already had family members en route to visit.
That Trump chose Holocaust Memorial Day to make the announcement was all the more upsetting for many Americans.
Malala Yousafzai, the youngest ever recipient of the Nobel Peace Prize, said in a statement: "I am heartbroken that today President Trump is closing the door on children, mothers and father fleeing violence and war."
"I am heartbroken that Syrian refugee children, who have suffered through six years of war by no fault of their own, are singled out for discrimination."
Civil rights groups have condemned the order as harmful and discriminatory.
"Extreme vetting is just a euphemism for discriminating against Muslims," American Civil Liberties Union Executive Director Anthony Romero said in a statement.
The order temporarily suspends the United States' main refugee programme and halts visas being issued to citizens of several predominantly Muslim countries, including Iraq.
It is expected to affect two programs U.S. lawmakers created a few years after the 2003 invasion of Iraq to help the tens of thousands of Iraqis who risked their lives helping Americans.
Trump says the order is necessary to prevent Islamist militants from coming to the United States posing as refugees, but refugee advocacy groups say the lengthy screening of applicants by multiple U.S. agencies makes this fear unfounded.