Sharkiya is owned by a London-based Iraqi businessman and says it takes an independent editorial line, although many viewers see it as leaning towards a minority Sunni Arab viewpoint.
Interior Ministry spokesman Brigadier General Abdul Karim Khalaf said the government had ordered the channel to close indefinitely.
''We warned them many times not to broadcast any false news which would increase the tension in Iraq,'' Khalaf told Reuters, declining to specify which reports were false.
The closure took place two days after the execution of former President Saddam Hussein, which angered many of his fellow Sunni Arabs.
Asked if the move was prompted by Sharkiya's coverage of the execution, Khalaf said: ''In the last three days if you watch their channel you can see they are leading people to violence and increasing sectarian tension,'' he said.
REUTERS MS VC1915