"With NGOs more and more restricted in the Med & the #EU determined to trap people in #Libya, we've put the #Prudence on standby," MSF said on Twitter.
Libya's navy this week ordered foreign vessels to stay out of a coastal "search and rescue zone" for migrants headed for Europe.
Navy spokesman General Ayoub Qassem said on Thursday that the measure was aimed at non-governmental organisations "which pretend to want to rescue illegal migrants and carry out humanitarian actions".
MSF said that while it would continue to provide assistance to other rescue operations, it was suspending the use of the Prudence -- one of the largest NGO vessels in the Mediterranean that rescued 1,500 people in May alone.
"European states and the Libyan authorities are jointly implementing a roadblock for people looking for security," MSF Italy president Loris De Filippi said in a statement.
"It's an unacceptable attack on the lives and dignity of people."
Italy, which has borne the brunt of Europe's migrant crisis this year, warned NGOs earlier this month that they would not be allowed to continue working in the Mediterranean if they did not sign up to new rules governing their operations.
Under a new code of conduct drawn up as a German vessel was impounded for allegedly aiding people smugglers, boats would have to have an Italian police officer on board monitoring activities.
Most aid agencies conducting rescues off the coast of Libya have signed up to the agreement, but not MSF.
Some 600,000 mostly African migrants have arrived in Italy from Libya since the start of 2014, putting the country's reception facilities under strain and the centre-left government under pressure with elections looming next year.
Six years since a revolution that toppled longtime dictator Moamer Kadhafi, Libya has become a key departure point for migrants risking their lives to cross the Mediterranean to Europe.
Tens of thousands of migrants have resorted to paying people traffickers for the journey, often on overcrowded and unseaworthy boats.