Health Minister Michalis Hadjipantela announced the new ruling after a cabinet meeting.
The reintroduction of face masks in Cyprus comes after a surge of Covid cases. The island reported 10,879 new cases for the week ending 1 July, just as the summer tourist rush began.
Mr Hadjipantela cited a spike in Covid-related hospital admissions, and that people were not taking necessary precautions against Covid, as contributing factors in the decision.
The island scrapped all Covid entry rules from 1 June and announced its mask mandate would be dropped in most places.
Under the new rules, people will now have to wear a face mask in indoor areas from Friday and could face a €300 fine if ignored. However, holidaymakers can still travel to Cyprus with no proof of vaccination or a negative Covid test.
The new regulations come as the highly infectious Omicron sub variants BA4 and BA5 are on the rise.
Liberal Democrats MP Layla Moran believes more countries might reintroduce restrictions on UK arrivals due to rising Covid cases.
She told theThe Mirror: “It is possible that holiday plans will be ruined due to rising Covid rates in the UK.
“Other countries could reintroduce restrictions on arrivals from Britain and transport companies, already in crisis from the government’s mishandling of Brexit and industrial action, are likely to see an increase in staff shortages with more people off sick with the virus and Long Covid.”
Countries such as Italy and Germany have also experienced a surge in cases in the last few weeks. Germany is currently experiencing its highest infection rate in two months, meaning tourists must wear a face mask at all times when using public transport.