EU member states have agreed to suspend export licences for any equipment that could be used for repression in Egypt, but humanitarian aid will continue.
The decision was announced by EU foreign policy chief Baroness Ashton after emergency talks in Brussels.
She said EU governments "feel very strongly that they want to continue to support vulnerable people in Egypt".
The foreign ministers met after a week in which more than 900 people have died in Egypt's political violence.
Lady Ashton said the EU would review its assistance to Egypt and was urging all sides to "stop the violence and provocations" and "engage in inclusive national dialogue, open to all".
Arms are provided by individual countries rather than the EU as a whole, mostly by Germany, France and Spain. The UK has already suspended some of its military help.
Earlier the UK urged its EU allies to maintain aid for ordinary Egyptians.
UK Foreign Secretary William Hague said most Egyptians wanted democracy, so "we mustn't do anything that hurts them or that cuts off support to them".
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EU aid for Egypt
Nearly 1bn euros (£854m) allocated for 2007-2013, but some of it blocked because of lack of reforms
23m euros allocated to non-state civil society groups
5bn euros pledged in November 2012, but mostly frozen because of reform concerns
EU military aid worth about 140m euros annually
Source: European Commission
Lady Ashton visited Egypt last month, when she was allowed to meet the deposed President Mohammed Morsi.
"I am more than willing to go back... if they wish me to," she said before the Brussels meeting.
Europe 'must speak up'
Last November the EU pledged a 5bn-euro (£4.3bn) aid package for Egypt. It consists of 1bn directly from the EU, with the rest from the EU-associated European Investment Bank and European Bank for Reconstruction and Development. But most is already frozen because of EU concerns about corruption in Egypt.
Going into the EU meeting, Swedish Foreign Minister Carl Bildt deplored the violence in Egypt, saying "primary responsibility rests with the regime forces".
He called it "an unprecedented wave of repression and violence" and added: "It's very important that Europe speaks up."
Mr Bildt said he did not want a suspension of aid, but "we are clearly not sending taxpayers' money to people responsible for massacres".
UK's William Hague with fellow EU ministers in Brussels, 21 Aug 13
The Egypt crisis is a challenge for William Hague (left) and Lady Ashton (right)
Gulf is major donor
The EU says it has sent about 450m euros to Egypt in the last three years.
However, this money is not going to the government: it is being spent on projects to improve sanitation and water supplies, and to help towards construction of the Cairo underground train system.
This year, only 16m euros has been paid to the Egyptian government out of the 1bn euros in EU development funding earmarked for Egypt for 2007-2013.
Separately, the EU has allocated about 23m euros to non-state civil society groups in Egypt.
EU military aid is worth about 140m euros a year, compared to US defence aid worth a much greater $1.3bn (1bn euros; £0.8bn). The US also gives about $250m in other assistance.
Meanwhile, Saudi Arabia, the United Arab Emirates and Kuwait recently pledged $12bn in aid.
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