Puerto Rican singer Luis Fonsi’s hit track, which features Daddy Yankee, has been pulled from state radio and TV.
Communications Minister Salleh Said Keruak said it had been banned over complaints that the lyrics are obscene.
Lyrics include: ‘We will do it on the beach in Puerto Rico/Until the waves scream Dear Lord/So that my seal stays with you.’
The ban doesn’t apply to private stations, YouTube or the music streaming services.
The women’s wing of a Malaysian Islamist party, Amanah, has previously called for the song to be removed from the country’s airwaves as many young children were singing it without understanding the words.
‘I see this as a serious matter as the song is being sung by young people without knowing the real meaning of the words,’ Amanah official Atriza Umar said in a statement.
The song features Justin Bieber on its remixed version and has topped charts around the world as well as being streamed a staggering 4.6 billion times in just six months.
Malaysia has previously postponed the release of Hollywood film Beauty and the Beast so a ‘gay moment’ in the film could be cut.