The Taliban has been added to the so-called list of entities, along with the Haqqani network, an Islamist group believed to be behind ongoing attacks on international coalition forces in Afghanistan.
Both were added by Public Safety Minister Vic Toews earlier this month, bringing to 46 the number of groups on the terrorist list, which was set up in the wake of the 9/11 attacks.
Any person or group on that list can have their assets seized, and criminal penalties exist for assisting so-called listed entities with the aim of helping them carry out extremist activities.
Canada had effectively barred Canadian institutions from doing business with the Taliban in 1999, when it signed on to the al-Qaida Sanctions List developed by the United Nations.
The addition of the Taliban to Canada's own list makes Canada the first NATO country to use domestic law to outlaw the group, said Julie Carmichael, a spokesman for Public Safety Minister Vic Toews.
"The first job of any government is to keep Canadians safe from those who wish to harm us, and this is a responsibility our Conservative government takes very seriously," she said in an email.
"Our government has taken a number of actions to equip law enforcement and the courts with more tools to combat terrorism, including the recently passed Combating Terrorism Act."
When asked why Canada was listing the Taliban now, as opposed to at any point over the course of the last decade of conflict in Afghanistan, Carmichael did not give a direct answer.
"While there are already a number of measures in place against the Taliban and its members, a Criminal Code listing would facilitate the prosecution of perpetrators and supporters of terrorism and plays a key role in countering terrorist financing," she said.
In recent months, a number of Canadians have been linked with international terrorist activities, including a bus bombing in Bulgaria, an explosion at a gas plant in Algeria and a plot to attack train lines between Canada and the United States.
Various factions of al-Qaida and Hezbollah are believed to be involved in all of those attacks; both groups are already Canada's black list.
Canada's listing of the Haqqani network as an official terrorist group follows similar actions last fall by both the United States and the United Nations.
The group, dubbed the "Sopranos of Afghanistan," has been responsible for several high-profile attacks in Afghanistan, including on Kabul hotels, the United States embassy and the International Security Assistance Force headquarters.
"The Haqqani network has also been involved in a number of kidnappings, and has co-operated with the Taliban and other militant organizations in Afghanistan," the UN said.
But outlawing the Haqqani group has been seen as potentially posing a risk to reconciliation efforts between the international community, the Afghan government and insurgent groups.
Those efforts come as the international community moves ever closer to the 2014 deadline for the end of military engagement in Afghanistan.
Canada's combat mission ended in 2011 but a small contingent of Canadian soldiers remains in Kabul, helping to train the Afghan army.