The US Treasury Department put on Wednesday Hamas chief Ismail Haniya on the terror blacklist.
The move is sure to raise tensions, after Washington recognized Jerusalem as Israel's capital.
"Haniya has close links with Hamas' military wing and has been a proponent of armed struggle, including against civilians," the State Department said in a statement.
"He has reportedly been involved in terrorist attacks against Israeli citizens. Hamas has been responsible for an estimated 17 American lives killed in terrorist attacks."
Haniya is now on the US Treasury sanctions blacklist, which freezes any US-based assets he may have and bans any US person or company from doing business with him.
Hamas -- which has controlled the Gaza Strip for more than a decade -- had already been on the US terror blacklist since 1997.
The US government also slapped sanctions on Harakat al-Sabireen -- a small militant group that is close to Iran and operates in Gaza -- and two other groups active in Egypt: Liwa al-Thawra and HASM.
“These designations target key terrorist groups and leaders -- including two sponsored and directed by Iran -- who are threatening the stability of the Middle East, undermining the peace process, and attacking our allies," Secretary of State Rex Tillerson said in a statement.
“Today’s actions are an important step in denying them the resources they need to plan and carry out their terrorist activities.”
Haniya replaced Khaled Meshaal, who now lives in Doha in exile.