"I have decided to dissolve Congress and call congressional elections. This is a constitutional act," Vizcarra said in a televised message.
The President said his order was "within the powers described" in the nation's constitution and that he sought to "put an end to this stage of political deadlock that has prevented Peru from growing at the best pace of its capabilities", Efe news reported.
He added that he hoped "this exceptional measure will allow citizens to finally express themselves and define the future of our country through their participation at the polls".
The President made the decision after Congress defied his administration by appointing a new member to the constitutional court without debating the government's objection.
The opposition lawmakers - who mainly belong to the right-wing Popular Force party led by former presidential candidate Keiko Fujimori - passed the vote anointing Gonzalo Ortiz de Zevallos as a justice on the highest court in the land.
Ortiz de Zevallos' nomination was controversial because he is the first cousin of the chamber's speaker, Pedro Olaechea, who pressed on with the vote despite heavy protest by liberal and left-wing lawmakers.
Prime Minister Salvador del Solar requested a censure motion, but the majority voted it down.
On Sunday, Vizcarra had warned that if Congress failed to proceed immediately with the requested censure motion, or decided to continue with the controversial court appointments, the government would "act in accordance with the constitution" and dissolve the unicameral body.
Ortiz de Zevallos' confirmation hearing obtained the minimum of 87 votes required.
However, leftist lawmaker Maria Elena Foronda later claimed that she had been supplanted and her vote was falsely tallied as favourable. She said she would file a complaint with the prosecutor's office.
After this process, Olaechea announced that the vote to elect the other members of the court would continue on Tuesday afternoon, while they would dedicate Monday afternoon to discuss and vote on the censure motion.
The representatives were in full debate on this issue when the president's decision became known, causing congressional debate to end abruptly.
Soon after, a group of opposition Congress members launched a presidential impeachment process to remove Vizcarra from office on the grounds of his "permanent moral incapacity".
( With inputs from IANS )