Officials say 80 asylum applications will be accepted each day, and a maximum of 3,200 people will be allowed to travel through Austria.
The measures will be introduced on Friday.
The country has become a major transit route for migrants seeking to claim asylum in Germany.
Interior Minister Johanna Mikl-Leitner said Austria had no choice but to act, as there was no European solution yet in place for the current migrant crisis.
"It is a matter of common sense to secure our borders as long as there is no European solution. I see it as our responsibility, to maintain security, order and the quality of life in Austria for our citizens," she said.
"We cannot cope with the number of asylum applications that we had last year. That is why we impose limits on the stream of refugees. Another step is the introduction of daily quotas."
Schengen: EU free movement deal explained
Austria's Plan B to cap influx of refugees
Migrant crisis in depth
Austria took in about 90,000 asylum seekers in 2015, about 1% of its population, and officials expect to cut this number sharply this year, to about 37,500.
Observers say the influx has contributed to the rising popularity of the far right in Austria, sparking tensions in the governing coalition.
Neighbouring Slovenia and other countries in the Balkans - the main route for migrants bound for northern Europe - have also indicated that they will impose tougher measures against migrants.
Some EU states have already re-imposed border controls on a temporary basis.
The migrant flux is expected to intensify in coming months as weather conditions improve.
The crisis will be high on the EU's agenda at a Brussels summit on Thursday, and countries are expected to debate the future of the Schengen Agreement that creates a 26-nation passport-free zone.
Following the Austrian announcement, the Slovenian government said it had asked its parliament to approve the deployment of soldiers to its borders to help control the migrant flow.

Forfar are seven points clear of Arbroath, who move above Elgin City by beating them 3-2.
Edinburgh City extended their unbeaten league run to seven matches with a 0-0 draw at Clyde's Broadwood Stadium.
Montrose won 2-1 away to Berwick Rangers, while Stirling Albion beat Annan Athletic to move off bottom spot.
Fraser Mullen's free-kick gave Cowden the lead against Forfar, but Lewis Milne headed the visitors level.
Swankie's first strike of the day temporarily gave his side the lead, only for Mullen to convert another free-kick.
Kris Renton's strike put the hosts back in front, Josh Peters fired Forfar level again and Swankie's left-foot shot in stoppage time settled the match.
There was also late drama at Gayfield, where Elgin moved into a two-goal lead through strikes by Brian Cameron and Chris McLeish.
Bryan Prunty headed Arbroath back into the match and then set up Steven Doris to equalise.
The hosts had on-loan Dundee United defender Jassem Sukar sent off for a second booking and Elgin's Thomas Reilly suffered the same fate.
There was a further twist in the tale as Keiran Stewart fouled Colin Hamilton and Doris converted the resulting penalty.
It was an early spot-kick that gave Annan the lead at Forthbank Stadium, Max Wright scoring after Ross Smith had impeded Aidan Smith.
Darren Lee Smith's strike and Ross McMillan's header turned the match in Stirling's favour in the first half and Dylan Nguene Bikey fired Albion's clinching goal 15 minutes from the end.
Ryan Ferguson and substitute Jonny Court netted either side of Michael McKenna's leveller as Montrose claimed their second consecutive win over Berwick, with all three goals coming in the second half.
Austria will impose a daily quota on asylum claims and limit the flux of migrants travelling through the country.
[NEXT_CONCEPT]
Gavin Swankie's late winner gave Scottish League Two leaders Forfar Athletic a 4-3 win over Cowdenbeath, who sink to the foot of the table.