"The government is taking action to address the specific national security risks related to ByteDance Ltd's operations in Canada through the establishment of TikTok Technology Canada Inc," Innovation Minister Francois-Philippe Champagne said in a statement on Wednesday.
Ottawa has been reviewing TikTok's plan to invest and expand its business in Canada. ByteDance is TikTok's Chinese parent company.
Under Canadian law, the government can assess potential risks to national security from foreign investments, such as the TikTok proposal. The law prevents the government from revealing the details of such investments.
"The decision was based on the information and evidence collected over the course of the review and on the advice of Canada's security and intelligence community and other government partners," Champagne said.
TikTok said it would challenge the order in court.
"Shutting down TikTok's Canadian offices and destroying hundreds of well-paying local jobs is not in anyone's best interest, and today's shutdown order will do just that," a TikTok spokesperson said in a statement.
Canada has banned the TikTok app from government-issued devices, saying it presents an unacceptable level of risk to privacy and security.
TikTok and ByteDance sued in US federal court in May, seeking to block a law signed by President Joe Biden.
The law, signed by Biden on April 24, gives ByteDance until January 19 to sell TikTok or face a ban.
The White House has said it wants to see Chinese-based ownership ended on national-security grounds but not a ban on TikTok.
