The Spanish government has stripped Catalonia of its autonomy and taken charge of its government.
The measures on Saturday morning came after the Catalan parliament voted to declare independence on Friday.
An official state bulletin handed control of Catalonia to Spain's Deputy Prime Minister Soraya Saenz de Santamaria.
Earlier, Catalonia's most senior police officials had been stripped of their powers.
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 percent of potential voters who took part, 90 percent 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.
The statement from Interior Minister Juan Ignacio Zoido (in Spanish) followed hours later, announcing the "cessation" of 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.
Separately, Spain's Efe news agency reported that Pere Soler i Campins, the Mossos director general had also been dismissed by Madrid.
Mr Rajoy said Mr Puigdemont and his cabinet would be sacked, the parliament dissolved and elections called.
"[Mr Puigdemont] had the opportunity to return to legality and to call elections," he said.
"It is what the majority of the Catalonian people asked for - but he didn't want to do it. So the government of Spain is taking the necessary measures to return to legality."
Regional elections are scheduled for 21 December.
Mr Puigdemont urged supporters to "maintain the momentum" in a peaceful manner. Spanish prosecutors say they will file charges of "rebellion" against him next week.
Separatists say the move means they no longer fall under Spanish jurisdiction.
But the Spanish Constitutional Court is likely to declare it illegal, while the EU, the US, the UK, Germany and France all expressed support for Spanish unity.
What's the reaction been?
Thousands celebrated the declaration of independence on the streets of Barcelona, Catalonia's regional capital.
The same crowds that cheered each Yes vote from Catalan MPs reportedly booed Mr Rajoy as he made his announcement.
There were pro-unity demonstrations too, with protesters in Barcelona waving Spanish flags and denouncing Catalan independence. A large pro-unity rally is expected in Madrid on Saturday.
In other reaction:
- Barcelona's mayor Ada Colau condemned the move by Madrid, but also criticised Catalan pro-independence parties for "advancing at a kamikaze pace...after their mistaken reading of the results of the Catalan elections"
- EU President Donald Tusk said Madrid's government "remains our only interlocutor" in Spain, but called for restraint
- The UK government said it did not recognise the declaration of independence by Catalonia.
How did we get here?
After the 1 October referendum, Mr Puigdemont signed a declaration of independence but delayed implementation to allow talks with the Spanish government.
He ignored warnings by the Madrid government to cancel the move, prompting Mr Rajoy to first announce his plans to remove Catalan leaders and impose direct rule.
Catalonia is one of Spain's richest, most distinctive regions, with a high degree of autonomy.
Many Catalans feel they pay more to Madrid than they get back, and there are historical grievances, too, in particular Catalonia's treatment under the dictatorship of General Franco. But Catalans have been divided on the question of independence.