According to the country's culture minister, Dario Franceschini, the decision was influenced by Unesco's call to reconcile the challenge of preserving the lagoon with the economics of cruise and freight activity.
The ban will come into effect on August 1. This means that ships weighing more than 25,000 tonnes will no longer pass Saint Mark's Square for the Giudecca canal or share the space with gondolas and water taxis in the city center.
In a tweet, Franceschini said he is "proud of the commitment".
Cruise ships have attracted negative attention in Venice over the last few years, particularly when a 13-deck MSC ship collided with a tourist boat docked on the Giudecca Canal in 2019, injuring several people. The event sparked protests city-wide, with many Venetians calling for a total ban on large cruise ships in the lagoon.
When tourism was halted due to the COVID-19 pandemic, the absence of boats meant that Venice's canals sparkled with unusually clear water. Huge schools of fish could be seen swimming around, and swans enjoyed having the clear water of the Serenissima to themselves.
The decision to ban cruise ships will please many residents of Venice, who have expressed concern around sustainable tourism and environmental issues in recent years. Previous initiatives to prevent cruise ship traffic entering the area have not come to fruition, but this ban will formally address the issue.
In April, the government diverted large cruise ships away from Venice's historic center. Cruise ships were instructed to dock in the industrial port of Marghera, but according to Reuters that port is not suitable for large passenger and freight liners. A new location is currently being sought.