Some 200,000 Salvadoran immigrants allowed to live and work in the United States since 2001 will next year lose their right to remain in the country.
The move marks the Trump administration's latest move to tighten immigration enforcement.
The US will end the Salvadorans' temporary protected status (TPS) on 9 September 2019, giving them 18 months to leave or seek lawful residency, and for El Salvador to prepare for their return, administration officials said.
The status was granted in the wake of two devastating 2001 earthquakes in El Salvador that left hundreds of thousands in the country homeless.
The decision to end TPS for Salvadorans is part of the administration's broader push to tighten immigration laws and expel those living in the US illegally.
The move was heavily criticised by immigrant advocates who said it ignored violence in El Salvador and gave the Salvadorans few options but to leave the US or remain illegally.
The Trump administration has faced a series of deadlines over the past year to decide whether to end the protected status of immigrants in the US whose home countries have been affected by disasters.
Salvadorans are by far the largest group under TPS, a programme administration officials said is supposed to provide a temporary haven for victims, not a permanent right to remain in the US.
Critics have complained TPS has allowed participants to repeatedly extend their stays in six-month to 18-month increments.
Patricia Hernandez, 53, arrived in the US in 2000 and applied for TPS after the 2001 earthquakes. She has lived in North Carolina for 18 years and runs a subcontracting construction business with her Honduran husband.
The couple have two US-born teenage sons.
"This is a real blow for everyone," she said. "Most of us pay taxes, we're not living off the government, we're not criminals."
The family will move to Honduras with their children and the couple do not intend to return north, she said, though they worry about violence and political instability in central America.
Trump administration changes to the TPS programme mean that over the next two years approximately 250,000 people who previously had permission to live and work in the US will be subject to deportation if they remain.
Haitians and Nicaraguans will lose their protected status in 2019 and Hondurans, the second largest group in the programme, could lose their rights later this year.
"The past practice of allowing foreign nationals to remain in the United States long after an initial emergency in their home countries has ended, has undermined the integrity of the programme and essentially made the 'temporary' protected status a front operation for backdoor permanent immigration," said Roy Beck, president of Numbers USA, which favours less immigration overall.
Advocates of the programme say long-term resident Salvadorans and their children should not be sent back to El Salvador, a country struggling with a weak economy and gang violence that has given it one of the world's highest murder rates.
There are approximately 1.35 million Salvadorans of any status living in the US, according to US Census Bureau data analysed by the Migration Policy Institute, a non-partisan think tank.
A senior administration official briefing reporters on the decision said it was based on the status of El Salvador's recovery from the 2001 earthquakes.
The country has received millions of dollars in aid and rebuilt schools, homes and hospitals, the official said.
In the past two years, the US has repatriated 39,000 Salvadorans, showing the ability of El Salvador to absorb an influx, the official said.