The decision was announced following a meeting of the Belgian cabinet on Sunday.
Belgium's central banker, Guy Quaden and the President of the European central Bank, Jean-Claude Trichet met with government ministers on Sunday afternoon too.
The bank/insurer got into financial difficulty after it took over the Dutch bank ABN Amro just before the American subprime credit crisis started.
Fortis consists of two main divisions: one that groups banking activities, a second that does insurance.
The banking activities are being nationalised.
For Fortis this is, in a way, a return to the public sector. Fortis was formed in 1999 as the result of a merger of the public bank ASLK/CGER and Generale Bank.
Fortis is the largest bank of the Benelux and one of the biggest players in Europe.
The nationalisation came at the end of a day in which attempts to get France's BNP Parisbas and the Dutch bank ING to purchase parts of Fortis failed because no agreement could be reached on price.