The closure of 780 live poultry markets (LPMs) in the Chinese cities of Shanghai, Hangzhou, Huzhou and Nanjing in April reduced the daily number of H7N9 infections by more than 97 percent, said a study in The Lancet medical journal.
Most have since reopened, and China is approaching its flu season now.
"Our findings confirm that LPM closure is a highly effective intervention to prevent human disease and protect public health," study lead author Benjamin Cowling of the University of Hong Kong said in a statement.
"Without this robust evidence, policymakers would struggle to justify further closures of LPMs because of the millennia-old culture of trading live birds and the potential huge economic loss on the poultry industry in China."
The study said losses associated with the closures in April have been estimated at about 57 billion yuan (about $9 billion/ 7 billion euros).
A total of 137 people have been infected by the virus since February, and 45 have died.
Live poultry markets are common in China and countries like Thailand, Laos and Singapore, and present an ideal environment for virus spread between birds held together in very high concentrations.
The researchers had collected information about every laboratory-confirmed human case of H7N9 infection in the four cities over several months and constructed a statistical model showing the before-and-after effect of market closure.
The team found the closures reduced the average daily number of infections by 99 percent each in Shanghai and Hangzhou and by 97 percent in Huzhou and Nanjing -- and rapidly.
They also looked at the potential effects of other factors like a change in humidity, but found nothing else that could explain the sudden drop.
Cowling said two new cases of H7N9 identified in China's eastern Zhejiang province this month were of "great concern" -- as they showed the virus had continued to circulate and had the potential to cause a new outbreak in the autumn/winter flu season.
The team said local authorities must immediately close poultry markets in affected areas in the case of future outbreaks.
"In view of the potentially huge adverse economic effect of LPM closure, prompt and unanimous support of public health practitioners and clinicians for this necessary intervention will be paramount to protect human health from the... threat of avian influenza A H7N9 virus," they wrote.
Avian flu viruses have been around for a very long time in wild birds but do not generally cause disease in humans, though in rare cases they mutate and jump species.
Strains of the H5, H7 and H9 avian influenza subtypes have caused human infections, mainly following direct contact with infected poultry. None of the strains have yet mutated to become easily transmissible from person to person -- the epidemiologist's nightmare.
The best-known strain is the H5N1 virus that has caused 633 confirmed flu cases in humans in 15 countries from 2003 to July this year, of whom 377 died -- a death rate of about 60 percent.