A statement said all employees involved in industrial action would be locked out from Monday evening and flights grounded from 0600 GMT on Saturday.
Aircraft currently in the air will complete their flights, but there will be no further departures.
Chief executive Alan Joyce called his decision "unbelievable".
Fair Work Australia, the national industrial tribunal, adjourned a hearing on the Qantas dispute on Saturday night. The tribunal - which has the power to suspend or terminate industrial action - is to reconvene later on Sunday.
Australian Prime Minister Julia Gillard has warned that the dispute could have "implications" for the national economy.
The airline has been hit by a series of costly strikes. Baggage handlers, engineers and pilots have been involved in the action which the company says is costing A$15m (US$16m) a week.
The airline issued a statement on its Facebook page saying customers booked on Qantas flights should not go to the airport until further notice. The airline said a full refund would be available to those affected.
Relations between the unions and Qantas management started deteriorating in August after the airline announced plans for restructuring and moving some operations to Asia.
By Phil MercerBBC News, Sydney
At the heart of the dispute are concerns about pay and job security along with cost-cutting and the subcontracting of work overseas as Qantas looks to set up new airlines in Asia and sack hundreds of staff to revive its sagging international fortunes.
At Sydney international airport, feelings among marooned passengers oscillated between anger and frustration.
Qantas' decision to pull its entire international and domestic fleets from the skies comes during one of Australia's busiest travel weekends, with tens thousands of people converging on the hugely popular Melbourne Cup horse race, an event that stops the nation for a few, brief minutes.
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Qantas has a 65% share of the domestic Australian market, but has been making heavy losses on its international flights.
The restructuring is expected to mean the loss of 1,000 jobs from its 35,000-strong workforce.
The disruption to flights has also affected a meeting of Commonwealth heads of government in Perth, with reports that members from 17 delegations have been stranded in the city because of the dispute. It comes on a busy travel weekend, just days before the country's biggest horse race, the Melbourne Cup.
The Australian minister for transport, Anthony Albanese, said the government would take action to intervene in the dispute.
"We are very concerned about Qantas' actions, of which we were notified only mid-afternoon, with no advance notice from Qantas at any stage," he said.
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"The government is making an urgent application to Fair Work Australia to terminate all industrial action at Qantas. This will be aimed at both actions by unions and by Qantas management."
Qantas chief executive Alan Joyce announced the grounding of the airline on Saturday: "The airline will be grounded as long as it takes to reach a conclusion on this."
He said that he would not take "the easy way out" and agree to union demands. "That would destroy Qantas in the long term."
"I'm actually taking the bold decision, an unbelievable decision, a very hard decision, to ground this airline."
Mr Joyce said he made the decision early Saturday and then gained the approval of the Qantas board.
"We are locking out until the unions withdraw their extreme claim and reach an agreement with us," Mr Joyce said. "This is the fastest way to ensure the airline gets back in the air."
"They are trashing our strategy and our brand," he said.
"They must decide just how badly they want to hurt Qantas, their members... and the travelling public."
The Australian pilots association criticised the grounding.
"It's unprecedented and really it has hijacked the nation. It really has put everyone on notice and... it's forcing the government's hand on this," Barry Jackson of the Australian and International Pilots Association told Sky News.
"We really need to address this sooner rather than later and get the aircraft back in the air."
Qantas said as of 0400GMT on Saturday, there were 64 aircraft in the air - 36 domestic and 28 international - carrying more than 7,000 passengers. In total 108 aircraft will be grounded in 22 airports around the world.
The airline said 13,305 passengers were booked to travel on Qantas planes from overseas airports to Australia in the next 24 hours. About 1,310 international passengers may be at international airports now waiting for their flights to depart.
The Australian airline Qantas is grounding all international and domestic flights with immediate effect due to an industrial dispute.