The 15-member council passed a resolution drafted by the United States and backed by China, Pyongyang's sole ally, that took aim at North Korean exports and set up inspections of all cargo to and from the reclusive country.
Among the unprecedented measures is a new requirement that all countries must inspect cargo destined for and coming from North Korea, in all airports and sea ports.
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North Korea earns about $1 billion per year in coal exports -- a third of all export revenues -- and about $200 million annually from iron ore sales, US Ambassador Samantha Power told the council.
Banking restrictions will be tightened and governments will be required to ban flights of any plane suspected of carrying contraband destined for North Korea.
The resolution tightens an arms embargo by banning sales of small arms and bars vessels suspected of carrying illegal goods for North Korea from ports.
"These are among the toughest measures we have agreed against any country in the world, certainly the toughest ever against the DPRK," said British Ambassador Matthew Rycroft, referring to North Korea by its official acronym.
Under the measure, UN member states will expel North Korean diplomats engaged in smuggling or other illegal activities.
A total of 16 individuals and 12 entities were added to a UN sanctions blacklist, including North Korea's NADA space agency and its spy agency, the Reconnaissance General Bureau.
Luxury watches, snowmobiles, recreational watercraft such as Sea-Doos and sports equipment are banned from sale to North Korea, building on a previous resolution targeting Pyongyang's elites.
Japanese Ambassador Motohide Yoshikawa described the resolution as "ground-breaking" but stressed that sanctions were "not the final objective".
Chinese Ambassador Liu Jieyi said the resolution should "be a new starting point and a stepping stone" for renewed talks on dismantling North Korea's nuclear program.
UN Secretary-General Ban Ki-moon said "this firm response by the Security Council should put an end to the cycle of provocation and lead to the resumption of dialogue".
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