The First Minister made the announcement during her Covid briefing to the Scottish Government on Tuesday as she outlined the need to take further measures to curb the rising wave of Omicron cases across the country.
The significant reduction in attendance numbers will leave some clubs without matchday income over the festive period, and most supporters unable to attend some of the most eagerly-anticipated fixtures on the football calendar.
The Old Firm match between Celtic and Rangers at Parkhead on January 2 will now effectively be played behind closed doors, as well as the Edinburgh derby between Hibs and Hearts at Easter Road on January 3.
The SFA/SPFL Joint Response Group will meet today to discuss the announcement, with informal talks believed to have started between Scottish Premiership clubs and broadcaster Sky Sports over bringing forward the planned January winter break.
It is also a blow for Scotland’s two biggest professional rugby sides, Glasgow and Edinburgh, who are due to stage the annual 1872 Cup at Murrayfield on December 27 and in Glasgow on January 2.
In her speech to parliament, Ms Sturgeon said: "First, from 26 December - inclusive - for a period of three weeks, we intend to place limits on the size of public events that can take place. This does not apply to private life events such as weddings.
"For indoor standing events the limit will be 100; for indoor seated events it will be 200; and for outdoor events it will be 500 seated or standing.
“Physical distancing of 1 metre will be required at events that go ahead within these limits.
“This will of course make sports matches, including football, effectively spectator-free over this three week period.
“And it will also mean that large-scale Hogmanay celebrations - including that planned here in our capital city - will not proceed.
“I know how disappointing this will be for those looking forward to these events, and for the organisers of them.
“But I want to underline why we think this difficult decision is necessary.
“Firstly, we know that the much higher transmissibility of Omicron means large gatherings have the potential to become very rapid super-spreader events, putting large numbers at risk of getting infected very quickly. Limiting these events helps reduce the risk of widespread transmission.
“It also cuts down the transmission risks associated with travel to and from such events.
“And second, these large events put an additional burden on emergency services, especially the police and ambulance services.
“At a time when these services are already under severe pressure and also dealing with high staff absences, limiting large scale events will help them focus on delivering essential services to the public.
“So I would ask the public - despite the disappointment I know this decision will generate - to please understand the reasons for it.
“Secondly, we intend to issue guidance to the effect that non-professional indoor contact sports for adults should not take place during the three week period from 26 December. This is because these activities, where physical distancing is not possible, also create a heightened risk of transmission.”