The Catalan president, Carles Puigdemont, says the region will not accept Madrid’s plan for direct rule.
He described it as the worst attack on Catalonia’s institutions since General Franco’s 1939-1975 dictatorship, under which regional autonomy was dissolved.
Prime Minister Mariano Rajoy’s plans include the removal of Catalonia’s leaders and curbs on its parliament.
An independence referendum went ahead on 1 October, despite being banned by Spain’s Constitutional Court.
Mr Puigdemont said the Spanish government was acting against the democratic will of Catalans after refusing all offers of dialogue.
He said he would call for a session of the Catalan parliament to debate a response to Mr Rajoy’s plans.
Addressing European citizens in English, he added that the EU’s founding values were “at risk” in Catalonia.
Barcelona police said 450,000 people protested in the regional capital earlier on Saturday, with many chanting “freedom” and “independence”.
What is the Spanish government planning?
Mr Rajoy said he was triggering Article 155 of the constitution, which allows for direct rule to be imposed in a crisis on any of the country’s autonomous regions.
Speaking after an emergency cabinet meeting, Mr Rajoy stopped short of dissolving the region’s parliament but put forward plans for elections.
He insisted the measures would not mean Catalan self-government itself was being suspended. Instead, he said, the plan was to remove those people who had “taken self-government outside the law and the constitution”.
The measures, which are supported by opposition parties, must now be approved by the Senate in the next few days.
Reports say Spain’s interior ministry is preparing to take control of Catalonia’s Mossos d’Esquadra police force and remove its commander, Josep Lluís Trapero, who is already facing sedition charges.
The government is also considering taking control of Catalonia’s public broadcaster TV3, El País newspaper reports (in Spanish).
What other reaction has there been?
The use of Article 155 has sparked widespread criticism in Catalonia, where many say it amounts to a suspension of the region’s powers of self-government.
The Speaker of the Catalan Parliament, Carme Forcadell, called the measures a “de facto coup d’etat”.
“It is an authoritarian coup inside a member state of the European Union,” she said, adding that Mr Rajoy intended to “put an end to a democratically elected government”.
Catalan Vice-President Oriol Junqueras said Mr Rajoy and his allies had “not just suspended autonomy. They have suspended democracy”.
Barcelona Mayor Ada Colau said it was a “serious attack on the rights and freedoms of all, both here and elsewhere”.
Iñigo Urkullu, the president of the government in Spain’s semi-autonomous Basque region, said using Article 155 was “extreme and disproportionate”.
However Inés Arrimadas, head of the centrist Ciudadanos party in Catalonia which is against independence, said holding fresh elections would “restore goodwill and democracy” in the region.
Solution or provocation?
Guy Hedgecoe, BBC News, Madrid
Mariano Rajoy’s use of Article 155 had been widely anticipated but his announcement when it came still had a huge impact. The article has never been invoked before, so there was a certain amount of mystery surrounding its potential reach and meaning.
Although Mr Rajoy insists Catalonia’s self-government is not being suspended, many will disagree. The removal from office of Carles Puigdemont and all the members of his cabinet, to allow ministers in Madrid to take on their duties, amounts to a major reining in of Catalonia’s devolved powers.
The Spanish prime minister said one of his aims was to restore peaceful co-existence to Catalonia with these measures. Many Catalans who want to remain in Spain will approve of this strident action. But those who want independence for their region are likely to see this as a provocation rather than a solution.
How did we get here?
Even though Spain’s constitutional court ruled it illegal, Catalonia’s regional government held a referendum on 1 October to ask residents of the region if they wanted to break away.
Of the 43% of Catalans said to have taken part, 90% voted in favour of independence. Unionist parties who won about 40% of the vote at the 2015 Catalan elections boycotted the ballot and many anti-independence supporters stayed away, arguing it was not valid.
Mr Puigdemont and other regional leaders later signed a declaration of independence but immediately suspended it in order to allow for talks.
He then defied two deadlines set by the national government to clarify Catalonia’s position.