The world's biggest automaker said the move will see the lockout of about 6,400 employees at the factories in southern India.
Company and union officials had been trying to sign a new contract for the past 10 months, with the local government helping mediate negotiations.
"In the meantime, under the instigation of the union, certain sections of the employees have resorted to deliberate stoppages of the production line, abuse and threatening of supervisors thereby continuously disrupting business for the past 25 days," Toyota said in a statement.
"All these unlawful activities have been detailed in the lockout notice. With this background, the company is left with no other option but to declare a lockout of the premises to ensure the safety of its workers and management personnel," it added.
A Tokyo-based company spokesman said Toyota hoped to restart production quickly, but could not give a timeline for any re-opening of the plants, which make a range of models including the flagship Camry sedan, the Corolla and the Prius hybrid.
The two plants, near the city of Bangalore, produce about 310,000 units annually, the carmaker said.