The actions follow the latest report from the U.N. International Atomic Energy Agency, which said it cannot guarantee Iran's nuclear program is for peaceful purposes only.
Britain cut all financial ties with Iranian banks, while the United States took aim at Iran's oil industry as well.
"As president one of my highest national security priorities is to prevent the spread of nuclear weapons, including to the Iranian government. Since taking office, I have made it clear that the United States is prepared to begin a new chapter with the Islamic Republic of Iran, offering the Iranian government a clear choice," U.S. President Barack Obama said in a statement accompanying the order.
"It can fulfill its international obligations and reap the benefits of greater economic and political integration with countries around the world, or it can continue to defy its responsibilities and face even more pressure and isolation. Iran has chosen the path of international isolation. As long as Iran continues down this dangerous path, the United States will continue to find ways, both in concert with our partners and through our own actions to isolate and increase the pressure upon the Iranian regime."
Obama's executive order declared Iran a threat to "national security, foreign policy and [the] economy of the United States."
"Today, my administration has taken yet another step to further isolate and penalize Iran for its refusal to live up to its international obligations regarding its nuclear program. For years, the Iranian government has failed to abide by its obligations under the Nuclear Non-Proliferation Treaty," Obama said.
The executive order prohibits "certain transactions with respect to the development if Iranian petroleum resources … [and] comprehensive trade and financial sanctions on Iran." The order also authorizes sanctions against 11 individuals and entities who engage in activities that could help Iran develop its oil resources or help maintain or expand Iran's petrochemical production. The order also cuts off help from the Export-Import Bank.
"And today we have taken the next significant step to escalate the pressure by ... identifying for the first time, the entire Iranian banking sector -- including the Central Bank of Iran -- as a threat to governments or financial institutions that do business with Iranian banks," Obama said.
British Chancellor George Osborne said all British credit and financial institutions had to end working with Iran's banks by Monday afternoon, The Independent reported.
"We believe that the Iranian regime's actions pose a significant threat to the U.K.'s national security and the international community," Osborne said. "Today's announcement is a further step to preventing the Iranian regime from acquiring nuclear weapons."
The move by Britain is part of a broader international effort involving the United States and Canada, The Independent of London said.
The British Treasury said banks played a "crucial role" in facilitating Iran's nuclear program and denying access to London institutions would hinder Tehran's ambitions while preventing British institutions from being "unknowingly used by Iranian banks for proliferation-related transactions."
Iran has denied its nuclear program is for anything but civilian purposes.