President Recep Tayyip Erdogan's party AKP had filed a motion with the Supreme Electoral Council (YSK) on April 16 to nullify the election, alleging "irregularities." The objection also claimed that a margin of only 15,000 votes in a city as large as Istanbul was too close to be fair.
Turkish newspaper Haberturk said that the reason given for the new vote was that some ballot box workers were not official civil servants and that some results documents were unsigned.
The YSK had previously confirmed CHP candidate Ekrem Imamoglu the winner of the mayoral race in Erdogan's hometown, as the AKP launched its "extraordinary objection" to the results.
Imamoglu said he "condemned" the YSK for the decision, telling supporters late on Monday that the CHP had "won with the sweat of millions of people."
"They are trying to take back the election we won. Maybe you are upset but never lose your hope," he said.
A CHP spokesman said the move was neither legitimate nor democratic, calling it "plain dictatorship" on the part of Erdogan and the AKP.
"It is illegal to win against the AK party," CHP deputy chairman Onursal Adiguzel wrote on Twitter.
The European Union called upon Turkey to make the justification for the decision "available for public scrutiny without delay."
EU foreign policy chief Federica Mogherini said "the justification for this far-reaching decision, taken in a highly politicized context, should be made available for public scrutiny without delay ... Ensuring a free, fair and transparent election process is essential to any democracy and is at the heart of the European Union's relations with Turkey."
The head of the Council of Europe, Thorbjorn Jagland, said an election rerun had "the potential to severely damage the trust of the Turkish voters in the electoral authorities."
Although the AKP won the majority of races during the country's regional elections, it lost the key leadership positions in the cities of Istanbul and the capital, Ankara. The AKP has not demanded a recount or fresh vote for the Istanbul local assembly, where it won a majority of seats.
Erdogan has previously compared winning Istanbul to winning nationwide, and he campaigned heavily on behalf of the AKP.
The new vote is reportedly scheduled for June 23.