Somalia also summoned its ambassador to Ethiopia for deliberations over the port agreement signed by Ethiopian Prime Minister Abiy Ahmed and Somaliland President Muse Bihi Abdi on Monday.
The agreement would allow landlocked Ethiopia, which relies on neighboring Djibouti for most of its maritime trade, to set up commercial operations at a leased military base in Berbera.
It also included recognizing Somaliland as an independent nation in due course.
Abiy's stated ambition to secure access to the Red Sea is a source of tension between Ethiopia and its neighbors and has raised concerns of a fresh conflict in the Horn of Africa.
In October, Abiy said Ethiopia's existence was "tied to the Red Sea," adding that "if we (countries in the Horn of Africa) plan to live together in peace, we have to find a way to mutually share with each other in a balanced manner."
Somalia's cabinet said in a statement after an emergency meeting on Tuesday that the deal between Ethiopia and Somaliland "endangered stability and peace in the region."
"It is a violation and an open interference with Somalia's sovereignty, freedom and unity. ... The so-called a memorandum of understanding and agreement of cooperation is null and void," the statement said.
Ethiopia would offer Somaliland a stake in state-owned Ethiopian Airlines in return for giving it access to the Red Sea, Abiy's national security adviser said on Monday, without giving more details.
Billene Seyoum, spokesperson at Abiy's office, Meles Alem, spokesperson at Ethiopia's foreign affairs ministry, and Legesse Tulu, the Ethiopian government spokesperson, did not immediately respond to requests for comment.
Somaliland has not gained widespread international recognition, despite declaring autonomy from Somalia in 1991. Somalia says Somaliland is part of its territory.
Last week, the Somali National News Agency said Somalia and Somaliland had agreed to restart talks to resolve their disputes, following mediation efforts led by Djibouti.
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