More than eight million residents living in and around the capital now must stay at home from Saturday.
On Thursday, Chile reported 7,716 new daily cases, with the vast majority of infections being among those who had not been fully vaccinated.
Intensive care beds are nearing full capacity, health officials warn.
Jose Luis Espinoza, the president of Chile's National Federation of Nursing Association, says his members are "on the verge of collapse", Reuters reports.
Chile sees Covid surge despite vaccination success About 58% of the country's 17.5 million people have been fully vaccinated, and as many as 75% have received at least one vaccine dose.
But critics have accused the government of getting caught up in triumphalism over the vaccine rollout and of having loosened coronavirus restrictions too fast.
Chile's borders had been closed from March to November 2020. But after a strict lockdown had driven infections down, the decision was taken to reopen them.
Chileans were also given special holiday permits to travel more freely around the country during the southern hemisphere summer holidays.
Restaurants, shops, and holiday resorts were opened up to kickstart the faltering economy.
Chile has had nearly 1.5 million infections since the pandemic began, with more than 30,000 Covid-related deaths, according to America's Johns Hopkins university.