Morsi's decree also bars Egypt's judiciary from dissolving the upper house of parliament and an assembly drafting a new constitution -- two bodies dominated by Mr. Morsi's Islamist allies.
In addition, Morsi has ordered retrials of former officials who used violence in efforts to suppress last year's popular revolution against longtime president Hosni Mubarak.
A presidential spokesman said the moves were made to end a deadlock in Cairo on forming a new constitution and moving the country forward.
The president's action comes after he received international praise for mediating a Gaze cease-fire.
Egyptian courts have been examining cases demanding the dissolution of both assemblies. But Morsi's decree effectively neutralizes the judiciary system in favor of the ruling Muslim Brotherhood.
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