Waheed's Buffet and Banqueting Hall in Randal Street was 'named and shamed' by police after it hosted a huge wedding bash on Sunday (August 16).
Lancashire Police condemned the venue for its 'significant breach' of lockdown restrictions, which it said it had put people "at risk" of catching coronavirus.
The force had met with Blackburn with Darwen Council yesterday to discuss what action should be taken against the restaurant, but Waheed's was still open for business early on Monday evening.
The restaurant had issued an apology yesterday afternoon and the venue was deep cleaned as it prepared for a busy start to the week, with many households expected to take advantage of the Government's 'Eat Out to Help Out' scheme.
But last night, Waheed's was reportedly forced to shut its doors on orders from the Council after the restaurant became increasingly busy with customers.
Abdul Toheed, manager at Waheed's, said: "I am very upset with what has happened. We have followed the guidelines and have gone above and beyond what was expected today.
"We were busier today than yesterday (Sunday, August 16) and this was down to the Eat Out to Help Out Scheme.
"To be told we can’t now cater for our customers is upsetting. I hope we will be able to open up again soon."
Earlier that evening, the restaurant said it had taken all the appropriate safety measures to protect those dining and working at the venue.
Posting on Facebook, it said: "We are at the heart of the local community and can unexpectedly become very busy. The customers who came as part of the event did not all come together.
"As the number of customers grew, we moved some of the customers into our banqueting hall.
"We ensured that each table was following social distancing, and we took the contact numbers for track and trace.
"We completely support and adhere to the initiatives set out by the government in preventing and controlling the spread of COVID-19."
As well as enforcing social distancing and implementing a track and trace system, the restaurant said it had also carried out temperature checks at the entrance.
But the Council appears to have made the decision to shut down the venue with immediate affect. It is not known how long the restaurant will be forced to remain closed for.
Two other east Lancashire venues have also reportedly been ordered to close - Roberto's Bar and Bistro in Richmond Terrace, Blackburn and the Duke of Wellington Pub in Great Harwood.
The area is still subject to some of the country's strictest lockdown restrictions after its infection rate soared in recent weeks. According to the latest Government figures, 97 people tested positive in Blackburn with Darwen last week, with only Northampton and Oldham recording more new cases.
Blackburn with Darwen Borough Council has been approached for comment.