President Ali Abdullah Saleh says the decision was made by the country's Highest Defense Council, but there was no immediate word on how long the emergency laws would be in place.
Friday's announcement was made few hours after government snipers firing from rooftops shot into a crowd of tens of thousands of anti-government demonstrators, killing at least 41 people and injuring hundreds.
The protest was the largest yet in the popular uprising that began a month ago - and the harsh government response marked a new level of brutality from the security forces of Saleh.