They say Qatar backs militant groups including so-called Islamic State (IS) and al-Qaeda, which Qatar has denied.
The Saudi state news agency SPA said Riyadh had closed its borders, severing land, sea and air contact with the tiny peninsula of Qatar.
Qatar called the decision "unjustified" and with "no basis in fact".
The unprecedented move is being seen as a significant split between powerful Gulf countries, who are also close US allies.
It comes in the context of increased tensions between Gulf countries and their near-neighbour Iran. The Saudi statement accused Qatar of collaborating with Iranian-backed militias.
What has happened?
The diplomatic withdrawal was put into motion by Bahrain then Saudi Arabia early on Monday. The United Arab Emirates (UAE), Egypt, Yemen and Libya followed suit.
SPA cited officials as saying the decision was taken to "protect its national security from the dangers of terrorism and extremism".
The three Gulf countries have given Qatari nationals two weeks to leave their territory.
In the latest developments:
- The UAE has given Qatari diplomats 48 hours to leave the country. Abu Dhabi accuses Qatar of "supporting, funding and embracing terrorism, extremism and sectarian organisations," state news agency WAM said
- UAE airlines Etihad Airways, Emirates and Flydubai said they would suspend all flights to and from Qatari capital Doha from early Tuesday, local time
- The Gulf allies said they had closed their airspace to Qatar Airways, which has suspended all its flights to Saudi Arabia
- Bahrain's state news agency said it was cutting its ties because Qatar was "shaking the security and stability of Bahrain and meddling in its affairs"
- The Saudi-led Arab coalition fighting Yemen's Houthi rebels also expelled Qatar from its alliance because of its "practices that strengthen terrorism" and its support to groups "including al-Qaeda and Daesh [IS], as well as dealing with the rebel militias", according to SPA.
