Morocco regretted what it called Algeria's unjustified decision to cut ties, saying it would remain a “credible and loyal partner” to the Algerian people.
On Tuesday, Algeria's Foreign Minister Ramtane Lamamra had cited “hostile actions" on Morocco's part for its decision to suspend diplomatic relations.
“Algeria has decided to cut diplomatic relations with the Kingdom of Morocco from today,” the minister announced during a press conference.
Algeria said last week that it would review its relationship with Morocco after accusing it of complicity in the deadly forest fires that ravaged the country's north.
“History has shown that the Kingdom of Morocco has never stopped carrying out hostile actions against Algeria,” Mr Lamamra said.
Forest fires in Algeria, which broke out on Aug. 9 amid a blistering heatwave, burnt tens of thousands of hectares of forest and killed at least 90 people, including more than 30 soldiers.
Last week, Algeria’s President Abdelmadjid Tebboune said that 22 had been arrested on suspicion of starting the fires although he admitted the temperatures were a factor.
“Some fires have been caused by high temperatures but criminal hands were behind most of them,” he said in a televised speech.
Algerian authorities have pointed the finger for the fires at an independence movement in the mainly Berber region of Kabylie, which extends along the Mediterranean coast east of the capital Algiers.
Authorities also accused the Movement for Self-determination of Kabylie (MAK) of involvement in the lynching of a man falsely accused of arson, an incident that sparked outrage.
Last week, Algeria directly accused Morocco of supporting the MAK, which it classifies as a terrorist organisation.
“The incessant hostile acts carried out by Morocco against Algeria have necessitated the review of relations between the two countries,” a presidency statement said.
It also said there would be an “intensification of security controls on the western borders” with Morocco.
While the border between the two North African powers has been closed since 1994, diplomatic relations have not been broken since they were restored in 1988 following an earlier dispute.
Morocco's King Mohammed IV has called for warmer relations with the country's neighbour and the government have for years said it wants the border to reopen. Algeria has said it must stay shut for security reasons.
Algeria's foreign minister on Tuesday also accused Morocco's leaders of “responsibility for repeated crises” and behaviour that has “led to conflict instead of integration” in North Africa.
The UAE's Minister of Foreign Affairs and International Co-operation Sheikh Abdullah bin Zayed said the Emirates has always sought to strengthen relations between Arab states and regrets the developments taking place between Algeria and Morocco.
Commenting on the development, Saudi Arabia said it hopes for a return in relations "as soon as possible and calls on the brothers in the two countries to give priority to dialogue and diplomacy to find solutions to contentious issues in a way that contributes to opening a new page for relations between the two countries."
Relations between Algiers and Rabat have been fraught in past decades — especially over unrest in southern Morocco.
Rabat considers the former Spanish colony in the Sahara region an integral part of its kingdom — a view supported by the majority Arab states — but Algeria backs an armed independence movement that has waged an insurgency against the government for decades.
Last month, Algeria recalled its ambassador in Morocco for consultations after Morocco's envoy to the UN, Omar Hilale, expressed support for self-determination for the Kabylie region.