It is the latest chapter of political turmoil for the semi-autonomous city as fears grow that China is tightening its grip, and comes just over two years since Beijing issued an edict which plunged Hong Kong into months of protests.
That ruling in 2014, which said candidates for city leader must be vetted by a pro-Beijing committee, sparked massive rallies known as the "Umbrella Movement".
Now the city is bracing for another backlash as Beijing said it will not allow the two lawmakers to be sworn into office.
"The rule of law in Hong Kong is dead," pro-democracy lawmaker Claudia Mo told AFP.
"It's rule by decree."
The crisis came after rebel lawmakers Baggio Leung and Yau Wai-ching deliberately misread their oaths of office last month, inserting expletives and derogatory terms, and draping themselves with "Hong Kong is not China" flags.
They were initially granted a second chance at swearing in but authorities in Hong Kong and Beijing have stepped in to prevent that.
Beijing's intervention pre-empts a decision by Hong Kong's High Court into whether Baggio and Yau should be disqualified from taking up their seats. That court decision is still pending.
Pro-independence protesters clashed with police Sunday night in anticipation of Beijing's ruling, with riot officers firing pepper spray on the crowds.
In chaotic scenes reminiscent of the demonstrations of 2014, protesters charged metal fences set up by police outside China's liaison office in the city.
In a rare interpretation of Hong Kong's constitution Monday, Beijing said any oath taker who does not follow the prescribed wording of oath, "or takes the oath in a manner which is not sincere or not solemn", should be disqualified.
Hong Kong's leader Leung Chun-ying said he would "fully implement" the decision of the Communist-controlled National People's Congress (NPC).
Leung also said the emergence of the pro-independence movement had put a controversial anti-subversion security law, Article 23, back on the table.
That was previously shelved after massive public protests in 2003 which feared it would lead to suppression.
Pro-democracy protesters use umbrellas to shield themselves from pepper spray as police attempt to disperse protesters on September 28, 2014. Source: AFP
'Splitting the country'
Hong Kong is a former British colony which returned to Chinese rule in 1997 under a promise of "one country, two systems" for 50 years.
But there are deep concerns those liberties, enshrined in the city's constitution known as the Basic Law, are at risk.
As frustrations build, an independence movement demanding a split from Beijing has emerged.
Yau and Baggio are among several newly elected lawmakers advocating self-determination or independence who won seats in citywide polls in September.
Beijing sees any talk of independence as treasonous and the official Xinhua news agency quoted a spokesman for the government's Hong Kong and Macao Affairs Office welcoming the ruling.
Li Fei, the chairman of the Basic Law Committee of the NPC Standing Committee, told reporters: "These Hong Kong independence figures are going against the country and splitting the country. How can they uphold Hong Kong's Basic Law?"
"I hope people can see the real face of these people," he added.
Both those promoting independence and those arguing for self-determination were supporting separatism, he said -- anathema to China's ruling party.
Monday's announcement was the fifth time since the handover that China has interpreted the Basic Law.
Yau and Baggio have yet to be sworn into Hong Kong's main lawmaking body, the Legislative Council (Legco), after their first oath attempt last month was declared invalid.
When asked if there would now be a by-election for their seats, Legco president Andrew Leung said Monday that the legislature would await the High Court's decision before taking any further action.
