The country justifies the decision by saying that the United Arab Emirates has carried out a series of "provocative or hostile" measures, without providing further details.
The Emirati Foreign Ministry said on Thursday that it remains "determined" to maintain ties.
Algeria will now, among other things, close its airspace to planes registered in the United Arab Emirates, reports the Algerian television channel Ennahar.
The countries have taken different positions on several issues, including the conflict over Western Sahara. The United Arab Emirates supports Morocco's claim to sovereignty over the territory, while Algeria supports groups seeking independence.
