The US is suspending a large part of the $1.3bn (?810m) in aid it gives to Egypt’s military.
The delivery of large-scale military systems as well as cash assistance to the Egyptian government would be withheld, said the state department.
It said “credible progress” must be made towards free and fair elections, reports the BBC.
A review was launched in August after a crackdown by the authorities on supporters of ousted President Mohammed Morsi left hundreds of people dead.
“We will continue to hold the delivery of certain large-scale military systems and cash assistance to the government pending credible progress toward an inclusive, democratically elected civilian government through free and fair elections,” state department spokeswoman Jen
Officials said the freeze amounted to hundreds of millions of dollars in aid.
The US is halting the delivery of Apache helicopters, as well as Harpoon missiles and tank parts, officials said.
Washingtonalso plans to halt a $260m cash transfer and a $300m loan guarantee.
The BBC’s Kim Ghattas in Washington says the suspension of aid is more symbolic – a slap on the wrist – than a painful cut in essential aid.
The announcement had been expected, with deliveries of military hardware already halted, a military exercise cancelled, and cash aid in effect on hold since the summer, our correspondent says.
The US will continue to provide health and education assistance, and money to help Egypt to ensure security in the increasingly volatile Sinai peninsula.
The freeze was not intended to be permanent, the state department added.
In a speech to the UN General Assembly last month, US President Barack Obama criticised Egypt’s military-backed interim government for “decisions inconsistent with inclusive democracy”.
However, the US has held back from labelling President Morsi’s removal from power a coup.
Since the army ousted Morsi in July, Egyptian authorities have clashed repeatedly with Muslim Brotherhood supporters.
In the latest round of violence, more than 50 people were killed in clashes between Morsi supporters, opponents and security forces in several cities on Sunday.
Thousands of members of the Muslim Brotherhood have also been detained in the past two months.