"All schools which have obtained results below 50% will henceforth be categorised and be treated as dysfunctional schools," Reginah Mhaule said in a statement.
She declared there would be no schools in the province with a pass rate below 50% in 2013.
"We are serious about this and should this happen, heads will roll. We reiterate our position that a school is as good as its principal; as such, principals will always be held to account for the results of their respective schools."
Mhaule thanked teachers for their contribution to bringing up the province's pass rate. She said several districts had improved their results.
The Ehlanzeni district, 2011's best performer, improved its pass rate to 74% from 72.1%.
The Nkangala district improved to 73% in 2012, from 67.9%.
The Gert Sibande district improved its pass rate to 69%, from 65.4%.
The greatest improvement was in the Bohlabela district, where the pass rate increased by 9.8%, to 62.5% in 2012.
This was also an improvement by over 30% from the 28.2% pass achieved in 2009. Mhaule said that had resulted in Bohlabela being singled out for a "focused programme" that led to the marked improvement.