In new guidelines the Church said cremation remains should instead be stored in a sacred, church-approved place.
Until 1963 the Catholic Church banned cremation arguing that burial best expresses the hope in resurrection.
In the new document the Church repeats that burial remains preferred but outlines circumstances in which cremation is permitted.
An increasing number of Catholics are choosing cremation.
The new document from the Vatican's Congregation for the Doctrine of the Faith was published to counter "new ideas contrary to the church's faith", the Church said.
Ashes and bone fragments cannot be kept at home, since that would deprive the Christian community as a whole from remembering the dead, the Vatican warned.
Rather, church authorities should designate a sacred place, such as a cemetery or church area, to hold them.
Only in extraordinary cases can a bishop allow ashes to be kept at home, the document said.
Remains cannot be divided among family members or put in lockets or other mementoes. Nor can the ashes be scattered in the air, land or sea since doing so would give the appearance of "pantheism, naturalism or nihilism", the guidelines said.
It repeated church teaching that Catholics who choose to be cremated for reasons contrary to the Christian faith must be denied a Christian funeral.
The new instruction carries an August 15 date and says Pope Francis approved it on March 18.
Fr Christopher Thomas from the Catholic Bishops Conference tells Premier the guidance is not backdated: "Those who have had ashes scattered in the past I wouldn't want them to worry about anything because we entrust everything to the mercy and the love of God and the knowledge that he will bring all things to himself in his time".
He added that the dividing of ashes for lockets was "not a huge issue" in the UK and was more prevalent in the US.
Fr Christopher Thomas speaking to Premier's Antony Bushfield:
