The declaration followed clashes outside a Male police station between pro-democracy activists and the police Friday in which several people were injured. At least 200 people, including a former attorney general and a former minister were arrested.
Over 5000 demonstrators demanding the release of some pro-reform activists arrested earlier were tear-gassed. The subsequent release of the prisoners did not appease the protestors, who demanded the immediate resignation of several ministers and the Male city police chief.
Instead, the government launched a crackdown on the activists, and declared a state of emergency.
Gayoom has ruled Maldives, where political parties are banned, for the past 25 years.
Under international pressure following pro-democracy riots last year and reports of political repression, he had agreed to limited reforms including changing the constitution to admit political parties.
But the recent emergency order gives him the power to suspend the constitution and take whatever steps he thinks are necessary "to maintain peace."
Some reports said internet and short message services (SMS) on mobile phones had been cut off to prevent pro-democracy activists from communicating, and all international phone calls were being tapped.
Voicing concern over the situation in the region, an Indian foreign ministry spokesman said: "We are naturally concerned. We are watching the developments."