Prime Minister Habib Essid said the barrier would stretch inland from the Mediterranean coast which has become a new breeding ground for the Islamic State and other terror groups, The Daily Mail reported.
The decision has been taken after 38 people were killed when gunman opened fire on tourists in the resort town of Sousse on June 26.
Most of the victims were British holidaymakers.
The gunman, Seifeddine Rezgui, is believed to have trained with the Ansar al-Sharia group in Libya along with jihadis who shot dead 22 people at a museum in the capital Tunis in March.
Security has also been stepped up in Tunisia massively since the Sousse attack, with more than 1,400 armed officers deployed at hotels and beaches.
In view of latest terror attack in Sousse, Tunisia earlier decided to close down 80 mosques in the country accused of inciting violence.
Tunisians, Britons, Germans, Belgians, French and at least one Irish citizen were among those killed in the attack in Sousse, claimed by Islamic State (ISIS).