The US unemployment rate fell to 7.8% last month, dropping below 8% for the first time in nearly four years.
The rate fell because more people found work, a trend that could impact the presidential election in November.
The Labor Department said that employers added 114,000 jobs in September.
The US economy also created 86,000 more jobs in July and August than first estimated. Wages rose in September and more people started looking for work.
The revisions show employers added 146,000 jobs per month from July until September, up from 67,000 in the previous three months.
The unemployment rate fell from 8.1% in August, matching its level in January 2009, when President Barack Obama took office.
President Barack Obama has hailed the news as "a reminder this country has come too far to turn back now".
The decline, announced a month before the election, is expected to give his campaign a boost after he performed poorly in a debate with Republican opponent Mitt Romney.
"More Americans entered the workforce, more people are getting jobs," Mr Obama told a campaign rally at George Mason University in Virginia.
"Now, every month reminds us that we've still got too many friends and neighbors who are looking for work."
"Today's news is certainly not an excuse to try to talk down the economy to score a few political points," he said.
