Since midnight on Sunday, unvaccinated individuals aged 12 and above have been banned from leaving their homes, except for basic activities such as working, food shopping, going for a walk - or getting jabbed.
Austrian authorities are concerned about rising deaths and that hospitals will not be able to handle the growing influx of Covid patients.
Chancellor Alexander Schallenberg said:"We are not taking this step lightly, but unfortunately it is necessary."
The lockdown is understood to affect about two million people in the Alpine country of 8.9 million.
Austria has one of the lowest vaccination rates in western Europe, with only around 65% of the total population fully vaccinated.
The lockdown does not apply to children under 12 because they cannot yet officially get vaccinated.
It will initially last for 10 days and police have been asked to check people outside to make sure they are vaccinated, Mr Schallenberg said.
Unvaccinated people could be fined up to 1,450 euros (£1,200) if they do not adhere to the restrictions.
In recent weeks, the country has faced a worrying trend in infections. The country reported 11,552 new cases on Sunday, while a week ago there were 8,554 new infections.
The seven-day infection rate stands at 775.5 new cases per 100,000 inhabitants.
In comparison, the rate is at 289 in neighbouring Germany, which has already sounded the alarm over the rising numbers.
Mr Schallenberg pointed out that while the seven-day infection rate for vaccinated people has been falling in recent days, the same rate is rising quickly for the unvaccinated.
"The rate for the unvaccinated is at over 1,700, while for the vaccinated it is at 383," he said.
He also called on people who have been vaccinated to get their booster shot, saying that otherwise "we will never get out of this vicious circle".
Over the weekend in Austria, hundreds protested outside the chancellor's office in Vienna,
Over the weekend, hundreds of people gathered at an anti-lockdown protest, outside the chancellery in the capital, Vienna.