Ottawa says it will ban offshore oil and gas licensing in Arctic waters, a measure to be reviewed every five years.
The joint announcement with the U.S. also sees President Barack Obama designating the bulk of U.S.-owned waters in the Arctic Ocean and certain areas in the Atlantic Ocean as indefinitely off-limits to future oil and gas leasing.
Prime Minister Justin Trudeau says the move is intended to ensure a sustainable Arctic economy, protect the region's ecosystem and prevent future risks associated with offshore oil and gas activity.
Trudeau said his government will also encourage the use of energy efficiency measures and renewable power in an effort to reduce reliance on diesel in Northern communities.
The Canadian and U.S. governments also said they are launching processes to identify sustainable shipping lanes throughout Arctic waters, including the Beaufort and Chukchi Seas.
For Obama, the move Tuesday helps put some finishing touches on his environmental legacy while also testing president-elect Donald Trump's promise to unleash the nation's untapped energy reserves.