The company announced the decision by the Centers for Medicare & Medicaid Services on Thursday.
The ban stems from a review of the company's Newark, California, lab. The company acknowledged in April it was being investigated by several regulators and agencies following reports by The Wall Street Journal in which former employees said the company's tests were unreliable.
Theranos also says the government has suspended its approval to receive Medicare and Medicaid payments related to bloodwork.
In a statement, Holmes says she's disappointed by the decision, but the company accepts "full responsibility for the issues."
The 32-year-old Holmes started Palo Alto-based Theranos in 2003.