The Danish Girl has been nominated for a string of awards at upcoming ceremonies
The censorship move comes after the government received a flood of complaints from the country's citizens about the film's "immoral" content.
They demanded the award-winning film be banned for going against Islamic values after being released last Thursday.
A Twitter hashtag that read 'No to the screening of The Danish Girl'began to trend over the weekend.
The Gulf state's ministry of culture has now bowed to pressure from social media and forbid cinemas from screening the film.
Qatari citizens demanded the award-winning film be banned for going against Islamic values
The ministry tweeted: “We would like to inform you that we have contacted the concerned administration and the screening of the Danish film is now banned from cinemas.
"We thank you for your unwavering vigilance.”
Tom Hooper’s drama stars Oscar-winning British actor Redmayne as Danish painter Lili Elbe, who was one of the first to undergo gender reassignment surgery in the early 1920s.
The Danish Girl has been nominated for a string of awards at upcoming ceremonies and becomes yet another Western film to face censorship from the Islamic country.
Biblical films Noah and Exoduss: Gods and Kings are among the other most recent blockbusters to be banned.
Wolf of Wall Street, which features sex, swearing and drugs, survived a ban two years ago but only after nearly 50 minutes were slashed from the original version.
Wolf of Wall Street had nearly 50 minutes slashed from the original version
Many people in the country praised the latest ban, tweeting the film "contained enough moral depravity to go around the world".
Others said the transgender film "contradicts our religions, morals and traditions".
One Qatari social media user added: "We hope that the people responsible for the screening of such films will be held accountable."
LGBT groups fear the repressive state could target them with homophobic laws in the 2022 World Cup
According to a 2014 survey by Northwestern University in Qatar, 80 per cent of respondents said it’s appropriate to delete scenes that could be considered offensive.
LGBT right groups have hit out at the decision amid fears the repressive state could target them with homophobic laws in the 2022 FIFA World Cup.
Another twitter user said that the film told a "true story" and the "real deviance is in the mind of those who call for it to be banned."