The lockdown will last at least 10 days but could extend to 20, officials said. It makes Austria the first western European country to reimpose a full shutdown since vaccines became widely available.
Under the measures, people can only leave home for specific reasons, including buying groceries, going to the doctor, or exercising.
Non-essential shops have closed and Austrians are being asked to work from home if possible.
Fewer than 66 percent of Austria’s 8.9 million people are fully vaccinated, and inoculations have plateaued at one of the lowest rates in Western Europe.
As it locks down again, Austria is also introducing a vaccine mandate as of February 1 in a bid to curtail transmission rates, making it the first European country to enshrine inoculation against COVID-19 as a legal requirement.
The details of how the mandate will work are not yet clear, but the government has said people who do not adhere to it will face fines.
Austrian Chancellor Alexander Schallenberg apologised to all vaccinated people on Friday, saying it was not fair that they had to suffer under the renewed lockdown restrictions.
Earlier, Austria had imposed a lockdown solely for unvaccinated people but this did not slow infections enough.
Austria is among several western European countries where infections are rising and where there are concerns that vaccination rates are insufficient to hold off a winter surge at hospitals.
On Friday, it reported 15,809 new infections, an all-time high.
The World Health Organization warned earlier this month that Europe, which is again the epicentre of the pandemic, could witness 500,000 more COVID-19 deaths by February unless action is taken to stem the spread of the virus.