The decision by the Scottish Government will effectively force Scottish football behind closed doors for an initial period of up to three weeks, starting on December 26.
Derby matches involving Celtic and Rangers at Celtic Park and Dundee and Dundee United at Dens Park on January 2, plus Hibs and Hearts at Easter Road on January 3, will all be affected. Fans planning to attend those games and others must now watch at home.
Hibs host Aberdeen at Easter Road on Wednesday and can welcome a capacity crowd as the new limits do not take effect until Boxing Day.
The Edinburgh v Glasgow rugby double header would normally attracted more than 20,000 supporters at Murrayfield but that will also be severely restricted. The Scottish Rugby Union confirmed that the games will take place behind closed doors.
In her address to the Scottish Parliament, Sturgeon stated that public events would be limited to 100 spectators for indoor standing venues, 200 for indoor seated venues and 500 for all outdoor events.
Social distancing of one metre will be imposed at every event and the above rules will be effective for an initial three weeks and will then be reviewed. It also means Edinburgh's Hogmanay street party will likely be cancelled.
The announcement comes with infections rising due to the Omicron variant, which now accounts for more than 60 per cent of all Covid cases in Scotland.
Sturgeon said: “None of these [protections] are being proposed lightly but we do consider them necessary to help stem the increase in cases, safeguard health and protect the NHS and our emergency services and the economy while we complete and get the full effect of the booster programme.
“First, from December 26 – inclusive of that date – for a period of up to three weeks, we intend to place limits on the size of live public events that can take place. This does not apply to private life events such as weddings.
“For indoor standing events, the limit will be 100. For indoor seated events, it will be 200, and for outdoor events – 500 seated or standing. Physical distancing of one metre will be required at events that go ahead within these limits.
“This will of course make sports matches, including football, effectively spectator-free over this three-week period – a sitation similar to that in Wales from Boxing Day.
“And it will also mean that large-scale Hogmanay celebrations – including that planned here in our Capital city – will not proceed.”
Celtic have now requested that the SPFL bring the Premiership’s winter break forward.
The Glasgow club said in a statement: “In light of today’s announcement regarding supporters attending matches, Celtic can confirm that it has today requested that the SPFL bring forward the scheduled winter break and reschedule the fixtures affected by the regulations announced.
“The game owes it to supporters to explore all opportunities to maximise the prospect of all supporters being able to attend matches and support the game they love.”
Reacting to the crowd limits, the Scottish Football Supporters’ Association called for urgent financial support to help clubs impacted by vastly reduced income from fans.
The SFSA said: “Today's announcement by the First Minister, although not completely unexpected, will come as a real disappointment to Scottish football fans everywhere and a shock to the finances of many clubs.
“Local derbies and the festive feelgood factor is the highlight of the season to many and football proceeding with just 500 fans is also a major organisational nightmare for our bigger clubs.
“There will also be significant revenue shortfalls. For now we can all see the bigger picture and the urgent need for control, and in a day of few positives we welcome the fact that football has not been stopped completely which was always our deepest concern.
“It is another new normal but the SFSA would like to see urgent discussion for support on the financial impacts to our game and a road map for coming out at the other end.”
In horseracing, Musselburgh Racecourse’s Betway New Year’s Day meeting will now take place behind closed doors. A 6,000 crowd was expected but ticket-holders will now be offered a refund.