A resolution adopted Wednesday bans all weapons sales to and from Eritrea, and imposes a travel ban and an assets freeze on Eritrean political and military leaders.
An existing sanctions committee will name the people and companies subject to sanctions.
The United States and the African Union accuse Eritrea of arming al-Shabab rebels who are trying to overthrow the Somali government. Eritrean leaders have repeatedly denied the allegations.
The resolution demands that Eritrea "cease arming, training, and equipping armed groups and their members, including al-Shabab" that seek to destabilize the Horn of Africa region.
It also demands that Eritrea resolve a border dispute with Djibouti. The two countries clashed along the border in June 2008, leaving a number of Djibouti's soldiers dead or missing.
The Security Council has already urged the countries to withdraw their forces from the disputed area. Djibouti has done so, while Eritrea has not.
Eritrea has previously denied the charges.
Eritrea's information minister, Ali Abdu, told the Horn of Africa service today, echoing in Amharic the remarks of Eritrea's ministry of foreign affairs that the Security Council has "today passed a shameful resolution…"
The Tigrigna broadcast talked to Eritrea's ambassador to the United Nations, Araya Desta, who echoed the ministry's protest of the decision, which blames the United States for the decision.
"The fact of the matter is this resolution was originally conceived and feverishly executed by the United States. Britain, and especially Uganda, were co-opted as sponsors of the resolution…" the Minster said.