President Teodoro Obiang Nguema Mbasogo says it is for strategic reasons that Ciudad de la Paz, which means "City of Peace", is being designated as the new capital.
The current capital, Malabo, of the Spanish-speaking African country is located on the island of Bioko, off the coast of neighboring Cameroon.
Authorities, administrations, public companies and political bodies have one year to make the necessary preparations for the move, according to the decree.
It is unclear whether foreign missions will also be relocated.
