Deputy Prime Minister, Numan Kurtulmus, says Dutch ambassador would be barred from returning to Ankara, and high-level political talks suspended.
President Recep Erdogan has accused the Dutch and Germans of Nazism.
Turkish attempts to hold rallies in Germany, Austria, Switzerland and the Netherlands have been blocked.
Reports from Istanbul say Turkey and the Netherlands are now locked in an unprecedented diplomatic crisis.
Meanwhile, German Chancellor, Angela Merkel, has offered the Netherlands her full support and solidarity.
In Netherlands, Voters will go to the polls on Wednesday for a general election dominated by concerns about immigration and Islamic radicalism.

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