The change will come into force from May and prices will fluctuate each month, Mishal Al-Thani, chairman of a commission to study fuel prices, said in a statement on the official Qatar News Agency.
The overhaul of the domestic market will see future prices determined by global and regional factors as well as costs linked to fuel production and distribution, he said.
The price changes would also aim "to raise the efficiency of energy use in the state and to increase consumer awareness", he added.
However this would not "necessarily" mean higher prices for consumers, assured Thani.
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Domestic petrol and diesel prices have long been heavily subsidised by the Qatari government.
But Qatar pushed petrol prices up by 30 percent in January.
The move comes at a time when Qatar has seen its revenues drop sharply after world energy prices nosedived.
The emirate has already forecast a budget deficit of more than $12 billion in 2016, its first in 15 years.
The United Arab Emirates took a similar measure in July.