Prime Minister Narendra Modi's government has turned the spotlight on foreign charities since he took office last year, accusing some of trying to hamper projects on social and environmental grounds.
Last year, the government withdrew permission to Greenpeace to receive foreign funding, saying the money was used to block industrial projects.
Under the latest order issued by authorities in Tamil Nadu where Greenpeace is registered, the government said it had found that the organisation had violated the provisions of law by engaging in fraudulent dealings.
Greenpeace denied any wrongdoing and said the closure was a "clumsy tactic" to silence dissent.
"This is an extension of the deep intolerance for differing viewpoints that sections of this government seem to harbour," Vinuta Gopal, the interim executive director of Greenpeace, said in a statement.
A government official confirmed that the closure order had been issued on Wednesday but did not elaborate.
Greenpeace India has campaigned against coal mines in forests, genetically modified crops, nuclear power and toxic waste management.
In recent months the federal government has toughened rules governing charities and cancelled the registration of nearly 9,000 groups for failing to declare details of overseas donations.