It is the first time the level had been applied since the creation of France's current system of terror alerts -- Vigipirate -- in the 1990s and is the last step before the declaration of a state of emergency.
It gives authorities widespread power to disrupt daily life and implement sweeping security measures.
The move came after a scooter-riding gunman shot dead three children and a teacher at a Jewish school in Toulouse and police said the same gun and scooter had been used in the murders of three French paratroopers in the same area earlier this month.
France had already been on a national "red" terror alert level since the 2005 attacks in London.
The "scarlet" level calls for mixed police-military patrols to be carried out between the hours of 7am and 10pm.
Among other measures, it allows for control of access to train lines, restrictions on tunnel traffic, the stopping of civil aviation and the stopping or limitation of water distribution.
Authorities are also allowed to suspend public transport and schooling.