Kuwait's Emir Sheikh Sabah al-Ahmad al-Sabah issued a decree Sunday dissolving the national assembly, the state-run KUNA news agency reported after an emergency government meeting.
The reason cited for such move, which also brings down the government, was a "lack of cooperation'', setting the stage for early elections.
One day earlier, parliament speaker Marzouk al-Ghanem called for snap elections in the face of mounting security and economic challenges.
Under Kuwait's constitution, early elections must be held within two months of the dissolution of the parliament.
Kuwait, a major oil producer and a staunch ally of the United States, held its last parliamentary election in 2013.
Before the 2013 poll, Kuwait faced spilled over unrest from the Arab Spring and voted in a largely pro-government group of lawmakers.
In the coming election, Kuwait is faced with the squeeze of low global oil prices. Government-subsidized gasoline prices have been going up and other benefits have been cut, leading to growing dissent.