0330 GMT November 21, 2018
The kingdom gave the Canadian ambassador 24 hours to leave the country, in an abrupt rupture of relations over what it slammed as "interference" in its internal affairs, AFP wrote.
The move, which underscores a newly aggressive foreign policy led by Crown Prince Mohammed bin Salman, comes after Canada demanded the immediate release of human rights campaigners swept up in a new crackdown.
"The Canadian position is an overt and blatant interference in the internal affairs of the kingdom of Saudi Arabia," the Saudi Foreign Ministry tweeted.
"The kingdom announces that it is recalling its ambassador to Canada for consultation. We consider the Canadian ambassador to the kingdom persona non grata and order him to leave within the next 24 hours."
The ministry also announced "the freezing of all new trade and investment transactions with Canada while retaining its right to take further action".
Canada last week said it was "gravely concerned" over a new wave of arrests of women and human rights campaigners in the kingdom, including award-winning gender rights activist Samar Badawi.
"We urge the Saudi authorities to immediately release them and all other peaceful #humanrights activists," the Foreign Ministry tweeted on Friday.
Samar was arrested along with fellow campaigner Nassima al-Sadah last week, the latest victims of what Human Rights Watch called an "unprecedented government crackdown on the women's rights movement".
Samar is a vocal campaigner for blogger Raif Badawi, her brother who was arrested in 2012.
The latest arrests come weeks after more than a dozen women's right campaigners were detained and accused of undermining national security and collaborating with enemies of the state. Some have since been released.
The Saudi Foreign Ministry slammed the Canadian statement, signaling its growing irritation over Western criticism of the kingdom's poor human rights record.
"Using the phrase 'immediately release' in the Canadian statement is very unfortunate, reprehensible, and unacceptable in relations between states," the ministry tweeted.
In April, Canadian Prime Minister Justin Trudeau expressed his "serious concern" over the continued jailing of Badawi to Saudi King Salman.
Badawi's wife Ensaf Haidar has been granted asylum by Canada, where she is raising their three children now aged 14, 13 and 10 as a single mother.
Riyadh's expulsion of the Canadian ambassador was meant to send a strong message to other critical Western governments, observers say.