The ban on sales of all products from seals, including fur, meat and oil, was approved by EU foreign ministers meeting in Brussels without a debate.
The move follows many years of pressure from animal rights campaigners, who say Canada's annual seal hunt is inhumane.
The ban, which will affect the 2010 hunting season, will exempt products from traditional hunts carried out by the Inuit people in Canada and Greenland.
"The Council [of Ministers] adopted a regulation setting out harmonised conditions for the placing on the market of seal products," the ministers said in a statement.
Many Europeans back the ban, opinion polls show, with animal protection groups lobbying hard by showing brutality involved in seal hunts. Some of the animals are bludgeoned over the head with a spiked club known as a hakapik.
But Denmark abstained from voring and Sweden and other EU Baltic countries said exemptions from the ban were "of fundamental importance" to Inuit and other indigenous communities who partly live on the trade in seal products.
"Denmark is of the opinion that trade in seal products as a whole is a legitimate activity, which should not be unnecessarily hampered and stigmatised," the country's delegation said in a statement.
Canada, which insisted the EU should recognise that the hunt is conducted humanely, said it would launch a WTO challenge.
"Our government has consistently defended the rights of Canadian sealers to pursue a living and we will continue to use every tool at our disposal to protect their livelihoods from this unjustified and indefensible ban," Fisheries Minister Gail Shea said in a statement.
A European Commission spokesman said the legislation was not protectionist or discriminatory as it applied to all seals, whether they were in the EU, Canada or Norway.
"If others choose to challenge it in the WTO, then the European Commission will vigorously defend it," he added.
Canadian Trade Minister Stockwell Day, speaking to reporters, reiterated Ottawa's position that the sealing controversy should not affect separate talks between Canada and the European Union on setting up a free trade agreement.
The ban would affect some 4.2 million euros ($5.99 million) in annual businesses, EU diplomats have said.
Earlier this year, the European Parliament approved the ban, sharpening original proposals from the European Commission, which initially suggested a partial embargo coupled with clear labelling of products to show they contain culled seals (EurActiv 06/05/09).
(EurActiv with Reuters.)
