Ahle Sunnah Wal Jamaat was first banned in 2002 by then Pakistani leader Gen Pervez Musharraf.
Activists from the pro-al-Qaeda group formerly known as the Sipah-e-Sahaba (SSP), or Soldiers of the Companions of the Prophet, have been convicted of killing hundreds of Shia Muslims.
The head of the group described the ban as preposterous.
Other minorities, security targets and embassies have also been targeted by members of the group.
The interior ministry’s order says the organisation has been banned for what it calls its “concerns in terrorism”, according to a copy of the order obtained by the BBC.
But the head of the Ahle Sunnah Wal Jamaat group, Maulana Mohammad Ahmed Ludhianvi, told the BBC that the group intended to challenge the order in court.
“It’s taken us so long so rein in our activists – it will become very difficult to control their emotions if the ban is enforced,” he said.
After the last ban, many of the organisation’s activists went underground and allied themselves with other militant groups to carry out attacks across Pakistan.