Raigmore hospital has reached capacity, with long waits at A&E – known as “code black” status, the most serious level of system pressure.
All non-urgent elective surgery and outpatient activity has been cancelled across the health board in a “difficult decision”.
Urgent surgeries and outpatient activity, along with cancer care, will continue.
Community teams in Highland and Argyll and Bute are also suffering, NHS Highland said.
Staff rotas are being reviewed and additional support systems mobilised.
Dr Boyd Peters, Medical Director for NHS Highland apologised for the “upsetting” move to cancel non-urgent work.
It is understood the increased pressure has come from high demand for non-Covid services in the hospital, and high numbers of staff having to self-isolate because of contact with Covid cases.
These contacts were mostly in the community, NHS Highland said, rather than major outbreaks in healthcare settings.
The situation in NHS Highland has been labelled a “warning” by doctors’ union BMA Scotland.
Dr Lewis Morrison, chair of BMA Scotland, said: “The news to come out of NHS Highland is extremely concerning and is a stark reminder – if anyone needed it – of just how overstretched our NHS currently is – and has been, even pre-pandemic.”
He added: “There is growing pressure and demand across all services of our NHS, and some services are now seriously short-staffed.
"Given the rising number of cases in the community it is somewhat inevitable, however we didn’t have the staff to cope properly prior to these increased pressures, we certainly don’t have them now.
“NHS Highland may be something of a warning light for much of our NHS and reflects the experience members are increasingly reporting to us, highlighting just how susceptible to disruption many services are right now.”
Scottish Liberal Democrat MP for Caithness, Sutherland and Easter Ross, Jamie Stone, said the escalating situation showed the Scottish Government “does not have a grip on the pandemic”.
Dr Boyd Peters, Medical Director for NHS Highland, said the health board is doing “all it can” to keep the situation under control.
“We are doing all we can to safeguard services but we have had to make the difficult decision to cancel non-urgent work which I know many will find upsetting and frustrating,” he said.
"We are very sorry that we have had to do this.
“Covid is on the increase again but what is different this time is that we are seeing more medical and surgical activity at the same time. We also have a high number of staff having to self-isolate.
“If you are accessing services please be advised that your wait may be longer than expected. We are doing everything we can to minimise that but the pressure on the system is significant. We would also ask that you ensure you are accessing the right service for the care you need.”
It comes as figures from Public Health Scotland published on Tuesday revealed the highest number of visits to A&E since before the pandemic.
Almost 300,000 visits were recorded in May, the highest monthly figure since January 2020.
The Royal College of Emergency Medicine called the figures “deeply concerning”.
Vice President Dr John Thomson said: “We are battling community admissions, elective care patients seeking treatment, as well as increasing covid patients attending our departments, all within the context of reduced bed-stock.
“Departments are filled with patients, some who may have Covid, waiting to be seen, while long-stays alone can put patient safety at risk. This risk is increased as some patients could contract the disease in a busy Emergency Department.”
Scottish Labour health spokesperson, Jackie Baillie, called for more funding for A&E staff.
She said: “These statistics plainly show that our A&E services are under increasing strain and that the Scottish Government’s eye is simply not on the ball.
“We cannot have thousands of patients in pain for hours and hours in A&E clinics but unless other services are properly remobilised patients will feel they have nowhere else to turn.”
Scottish Greens health spokesperson Gillian Mackay said the Scottish Government “must ensure that the NHS is properly supported to meet rising demand”.
She added: “A&E departments and GP surgeries are extremely busy at the moment and there are no signs of this abating as previously undiagnosed conditions emerge and backlogs of care are worked through.
“They cannot be expected to provide pre-pandemic levels of service without increased resources.”
‘Bed blocking’ is also at its highest level since before the pandemic.
The number of days hospital beds were blocked by patients who were medically cleared to leave but had not been discharged reached 35,348 in May, almost 70 per cent higher than the month before.
On the last Thursday of May, used as a “census point” to compare monthly statistics, there were 921 people delayed more than three days, an increase of 65 on April 2021.
Of those, health and social care reasons caused 531 of the delays (58 per cent, patients’ complex needs accounted for 354 delays (38 per cent) and patient and family-related reasons were responsible for 36 delays (4 per cent).
The Scottish Conservatives labelled the new figures “miserable”.
Shadow Health Secretary Annie Wells MSP, said: “While everyone understands the pressure our NHS is under due to Covid, it is clear the SNP’s NHS recovery plan simply isn’t moving fast enough."
Public Health Minister Maree Todd said the Scottish Government is “acutely aware” of the pressure on NHS Highland.
“While the increase in NHS staff absences over recent weeks is significantly lower than previous phases of the pandemic, this reflects the overall increase in infection rates across the population - and it is a reminder that each of us needs to continue doing all we can to slow the spread of the virus,” she said.