Qatar's support of the Muslim Brotherhood, the world's oldest Islamist movement, as well as accusations that Doha even backs the agenda of Saudi arch-rival Iran has indeed been the trigger for the estrangement.
The Saudi kingdom made the announcement via its state-run Saudi Press Agency early on Monday, saying it was taking action for what it called the protection of national security.
Saudi also closed the border and halted air and sea traffic with Qatar, urging "all brotherly countries and companies to do the same".
The news agency released a statement in which it accused Qatar of "harboring a multitude of terrorist and sectarian groups that aim to create instability in the region".
"The measures are unjustified and are based on false and baseless claims", Qatar said.
The UAE said in a statement it was cutting off all ties with Qatar.
Travel disruption is expected as the airport in Doha, Qatar's capital, is a major hub for worldwide flight connections.
It also ordered Qatari citizens to leave the country within 14 days and banned its citizens from travelling to Qatar.
The hawkish tone Trump brought in his visit to over 50 Muslim leaders in Riyadh on Tehran and on terrorism is seen to have laid the groundwork for the diplomatic crisis.
Saudi authorities said the country's airspace would be closed to Qatari planes.
A Saudi-led coalition which for more than two years has been attacking Yemen separately announced that Qatar was no longer welcome in the alliance.
Last month, the Qatari news agency quoted Emir Tamim bin Hamad Al Thani as saying that Iran is "a regional, Islamic power that can not be ignored" and it would not be wise to fight against it.
Egypt, the Arab world's most populous nation, said on its state news agency that Qatar's policy "threatens Arab national security and sows the seeds of strife and division within Arab societies according to a deliberate plan aimed at the unity and interests of the Arab nation".
"What is happening is the preliminary result of the sword dance", tweeted Hamid Aboutalebi, deputy chief of staff to Iranian President Hassan Rouhani, referring to Trump's joining in a traditional dance with the Saudi king at the meeting.
Foreign Minister Sheikh Mohammed Bin Abdulrahman Al Thani also told Doha-based satellite news network Al-Jazeera that his nation rejected those "trying to impose their will on Qatar or intervene in its internal affairs".
'I do not expect that this will have any significant impact, if any impact at all, on the unified fight against terrorism in the region or globally, ' said US Secretary of State Rex Tillerson in Sydney. The measures are more severe than during a previous eight-month rift in 2014, when Saudi Arabia, Bahrain and the UAE withdrew their ambassadors from Doha, again alleging Qatari support for militant groups.
Football's world governing body said it had spoken with "the Qatar 2022 Local Organizing Committee and the Supreme Committee for Delivery & Legacy handling matters relating to the 2022 FIFA World Cup".
FlightRadar24, a popular airplane tracking website, said Qatar Airway flights already had started to be affected.
The expert said that Egypt's decision to join Saudi Arabia, the UAE and Bahrain gave the issue an Arab dimension and a greater weight, and encouraged other countries to join and take similar steps.
Qatar's stock market index sank 7.3 per cent, with some of the market's top blue chips hardest hit, and some Egyptian banks said they were suspending dealing with Qatari banks.