The Information Affairs Ministry said Sunday the decision to shut down Al-Wasat came over its publication of a story "affecting the relations of the kingdom of Bahrain with other countries”, AP reported.
Mansoor al-Jamri, the paper's editor-in-chief, said the article dealt with a northern Morocco town where the arrest of demonstrators has aggravated public anger over corruption and poor economic conditions.
Al-Jamri said the order was a "total surprise." He added, "We didn't have any due process basically."
The decision comes amid a yearlong crackdown in which activists have been arrested or forced into exile while political parties have been disbanded.
Bahrain, a close ally of the US in the Persian Gulf, has been witnessing almost daily protests against the Al Khalifa dynasty since early 2011, with security forces resorting to harsh measures against demonstrators.
Scores of Bahrainis have been killed and hundreds of others injured and arrested in the ongoing crackdown on the peaceful protests.