An underground slide has created a sinkhole that is 200 metres wide and more than five metres deep, according to the provincial government.
Infrastructure and Transportation Minister Steve Ashton blamed the highway collapse on recent heavy rainfall in the region.
Officials estimate about 30 centimetres of rain fell in the area in the past month, weakening the soil.
"It just goes to show you, by the way, that we can't let our guard down," Ashton told reporters on Tuesday.
"We're still dealing with the impacts of last year's flood, but when we have rainfall of that level, and this really matches some of the rain we saw in May of last year … that was pretty much a flood-related, flash-flood related situation."
Karen Goraluk, who runs the Asessippi Beach and Campground, said there have been problems on the highway for the past few years from underground springs causing erosion.
"All of a sudden it'll drop a bit, [so] they'll come in they'll fill it; they'll pave it, fill it and pave it, and last week they were doing it every day," she said.
"Then all of a sudden, Sunday, they had to close the highway because it's absolutely impassable."
At one point during the weekend, the highway was sinking at a rate of 13 centimetres an hour, according to officials.
Area residents told the CBC's Nelly Gonzalez they have been watching the sinkhole regularly since Monday, and it was continuing to sink as of Tuesday.
Could take a while
Larry Halayko, a director with the Infrastructure and Transportation Department, said geotechnical experts have been brought in to assess the damage.
But it could take some take to determine the magnitude of the slide, Halayko warned.
"This is a fairly complicated geotechnical situation at this site, and it's going to need some time to review the slide and determine if it's moving any more or not," he told CBC News.
Highway 83 is closed from Asessippi Provincial Park to the Highway 5 junction at Roblin, according to the province's highway conditions website.
Local traffic can still access parts of the highway that are not in the immediate vicinity of the sinkhole, officials say. A detour is also in place.
Halayko could not say how long the highway will remain closed.