File Photo: Demonstrators face a row a police officers in Tunis, Tuesday, Jan. 26, 2021. AP
The authority, known as HAICA, seized the channel's broadcast equipment and said in a statement that Nessma TV was broadcasting without a licence.
"Despite multiple letters and meetings, the channel continued its activities illegally," the media authority said.
In July Karoui's former opponent, President Kais Saied, sacked the prime minister, suspended parliament after months of political stalemate.
HAICA also attributed the channel's closure to "suspicions of financial and administrative corruption", adding that the channel's ownership by a political party leader "influenced the content of its programmes".
HAICA had previously seized the channel's equipment in April 2019 for the same reasons.
The channel is partly owned by former Italian prime minister Silvio Berlusconi.
Karoui -- runner-up in the 2019 presidential election which Saied won -- had been arrested alongside his brother in Algeria since late August on charges of "entering the country illegally".
The two were reportedly released on Tuesday upon a request from their lawyers, according to Algerian and Tunisian media.
Karoui, the leader of the Qalb Tounes (Liberal) party, has been under investigation in his home country since 2017 in a money laundering and tax evasion case.
He was arrested in 2019 and spent more than a month in prison during his election campaign, before another six months of preventive detention that ended in June this year.
The business mogul allied himself during the election campaign with the Islamist-inspired Ennahdha party, Saied's nemesis, although Karoui opposed Islamist policies and campaigned against poverty.
Following Saied's July 25 decisions, local media spoke of Karoui's "flight" abroad.
In early October, Tunisian authorities seized broadcasting equipment used by another channel, Zitouna TV, which HAICA also said had been operating illegally.
Zitouna TV is considered close to Ennahdha and its ally Al-Karama, both of which oppose Saied.