Airlines notified to suspend operations in Pakistan until further notice.
The decision came after Pakistan said it had shot down two Indian Air Force planes in its airspace Wednesday.
Pakistan said it had captured two Indian pilots, with one in hospital.
At least five Indian airports were also closed and scores of flights were being cancelled, aviation authorities there said on condition of anonymity.
Pakistan closed its airspace Wednesday, the civil aviation authority and the military said, as fears spiked of an all-out conflict with nuclear-armed neighbour India.
The Civil Aviation Authority (CAA) tweeted that it "has officially closed its airspace until further notice", while a Pakistani military spokesman said the decision had been taken "due to the environment".
A CAA source told AFP that all airlines had been notified to "suspend their operations in Pakistan until further notice".
The decision came after Pakistan said it had shot down two Indian Air Force planes in its airspace Wednesday, taking tensions between the South Asian rivals to dangerous new levels.
Pakistan said it had captured two Indian pilots, with one in hospital.
At least five Indian airports were also closed and scores of flights were being cancelled, aviation authorities there said on condition of anonymity.
The Aviation Authority of India did not immediately respond to requests for official comment.