An official state bulletin dismissed Catalan leaders and handed control of Catalonia to Spain's Deputy Prime Minister, Soraya Saenz de Santamaria.
Earlier, Spain's interior ministry took charge of Catalonia's police after firing senior Catalan police officials.
On Friday, PM Mariano Rajoy announced the dissolution of the regional parliament and the removal of the Catalan leader, and called snap local elections.
Demonstrations for and against independence went on into the night.
More are expected on Saturday, with a rally "for the unity of Spain and the constitution" to be held in Madrid.
The crisis began when Catalan leaders held an independence referendum, defying a ruling by the Constitutional Court which had declared it illegal.
The Catalan government said that of the 43% of potential voters who took part, 90% were in favour of independence. Others boycotted the vote after the court ruling.
What are the latest developments?
On Friday afternoon, the Catalan regional parliament voted to declare independence from Spain.
Soon after, the Spanish Senate granted Mr Rajoy's government the power to impose direct rule on Catalonia.
It did so early on Saturday by publishing an official bulletin (in Spanish) that dismissed Catalan leader Carles Puigdemont and all government members.
The announcement came hours after the Madrid government removed Josep Lluís Trapero Álvarez as chief of Catalonia's autonomous Mossos police force.
Mr Trapero was already under investigation for sedition, accused of failing to help Spain's Guardia Civil police tackle thousands of pro-independence protesters in Barcelona during the run-up to the referendum.
Pere Soler i Campins, the Mossos director general, has also been dismissed.
The BBC's Sarah Rainsford, in Madrid, said that implementing the changes is likely to be a complex process for Spanish authorities - and one bound to be met with stiff resistance from those who just voted for independence.
Regional elections are scheduled for 21 December.
Mr Puigdemont has urged supporters to "maintain the momentum" in a peaceful manner, but Spanish prosecutors say they will file charges of "rebellion" against him next week.
More about: #Catalonia
