"There is simply no place in a Europe whole and free for a regime of this kind," President George W Bush said in a letter to the US Congress announcing his executive order.
Mr Bush’s order affects assets held in the United States or by US financial institutions.
The announcement came on the eve of the president's trip to Vienna for the annual US-European Union summit.
The high powered meeting is expected to examine issues such as the crisis surrounding Iran's nuclear program and the political situation in Belarus.
In a speech Mr Bush said that the United States and Europe had a duty to promote political freedom.
He said the US had to ensure that "we're fulfilling that duty together in Belarus, where we support the reformers seeking to erase the stain of dictatorship from Europe."
The decision affects Mr Lukashenko as well as his minister of justice, the head of the Belarusian state television and radio; the chairman of the Belarusian KGB; the state secretary of the security council; and the minister of internal affairs.
It also affects Mr Lukashenko's national security adviser; the deputy head of the presidential administration; the head of the central commission for elections; and the commander of the interior ministry's "Special Response Group”.
Mr Lukashenko, who has led Belarus with an iron fist since 1994, was re-elected to a third term in March with 83 percent of the vote amid charges of vote-rigging and abuse of opposition leaders and demonstrators.
The hardline leader has been called Europe's last dictator in the West. Some government officials have been banned from entering the European Union and the United States.