The action comes after tests showed four markets had poultry infected with the H5N1 virus. It was unclear how many birds would be killed or how many were infected, but around 3,500 chickens were for sale by nearly 470 retail vendors citywide as of Tuesday night.
"We cannot be complacent and that is why we are taking this decisive measure to close all retail outlets and to cull all remaining live poultry," Cheung Siu-hing, director for agriculture, fisheries and conservation, said at a news conference.
"We have not found any dead chickens with the virus — not yet," she added.
The virus has not been detected in samples from local chicken farms and distribution centers, and no one has been sickened in recent days, though officials said they planned to monitor some market workers.
"We're closely monitoring the possibility of human cases and we will remain alert," said Thomas Tsang, head of the government's health monitoring agency.
Health workers killed 2,700 poultry on Saturday in a market after routine testing showed five chickens were infected.
On Wednesday, government officials wearing protective smocks, goggles and surgical masks converged on markets throughout the territory. The chickens were then pulled from cages, slaughtered and placed in bags filled with disinfectant powder.
Many markets were already sold out of chickens before the killing started, as the government had imposed a 21-day ban on poultry from mainland China and local farms since Saturday's discovery.
Vendor Tam Sai-man, who used to sell about 200 chickens a day from his stall, said he ran out of poultry on Monday.
With the ban costing him money every day, he was worried more about earning a living than about catching the virus, saying he'd be out of business in the next three weeks without more poultry.
Authorities were trying to pinpoint the source of the virus, with some officials suggesting that infected chickens may have been smuggled to Hong Kong in defiance of strict trade protocols between the territory and the mainland.
"We are still investigating the source of infection and we do not rule out any possibility, including smuggling of chickens," Cheung said.
Hong Kong's biggest bird flu outbreak was in 1997, when the H5N1 strain jumped to humans and killed six people. That prompted the government to slaughter the entire poultry population of about 1.5 million birds.
In 2002, the government destroy thousands of birds after finding cases of bird flu at several waterfowl parks and food markets throughout the region. The following year, authorities quarantined two suburban farms hit by the avian flu and killed 10,000 chickens.