Miliband, whose party enjoys a 10-point lead in the latest polls, told the Observer newspaper that he would split the banks' "casino" investment operations from their high-street arms.
"Either they can do it themselves, which frankly is not what has happened over the past year, or the next Labour government will, by law, break up retail and investment banks," he warned.
Speaking ahead of the party's annual conference, set to open in Manchester on Sunday, Miliband urged banks to focus less on "playing the international money markets" and more on lending to small businesses.
A government-commissioned report led by John Vickers advocated a ringfence between banks' operations, but Bank of England chief Mervyn King last month warned that bank lobbying had "watered down" proposed reforms.
"The banks and the government can change direction and say they are going to implement the spirit and principle of Vickers to the full," said the Labour leader.
"That means the hard ringfence between retail and investment banking. We need real separation, real culture change. Or we will legislate."
Miliband on Saturday used a pre-conference question-and-answer session to outline his party's support for younger people.
He called for a sharper focus on vocational training and gave his backing for the voting age to be brought down to 16.
But he admitted that his party would not reverse many public spending cuts implemented by the current coalition government.
Despite the party's positive poll ratings, Miliband's personal ratings remain unimpressive.