The US State Department has said delivery of military equipment and money to Egypt’s military-backed government is being withheld.
The delivery of Abrams tanks, F-16 aircraft, Apache helicopters and Harpoon missiles are all being halted.
Washington also plans to halt a $260m (€192m) cash transfer and a planned $300m (€221m) loan guarantee to Cairo.
Officials said the decision to hold back aid to Egypt's military is not meant to the permanent.
US Secretary of Defense Chuck Hagel called Egypt's army chief General Abdel Fattah al-Sisi to tell him about the development.
Egypt’s army overthrew former president Mohammed Mursi in July, and his Muslim Brotherhood movement has seen hundreds of its members killed and thousands arrested since then.
The US State Department said Washington will continue to provide aid to Egypt for counter-terrorism and border security, but future aid will depend on the rule of law, fundamental freedoms and an open and competitive economy.
Dozens of people have died in Egypt since fresh violence flared at the weekend as Brotherhood supporters renewed their protests.