US Ambassador Samantha Power said a draft resolution will be presented in the coming days to ban weapons sales to the country, setting the stage for a clash with Russia and other opponents of an arms embargo.
"South Sudan is a nation at the precipice," Power told the council.
"In the coming days, the United States will put forward a proposal to impose an arms embargo on South Sudan and targeted sanctions on the individuals who have been the biggest spoilers to achieve lasting peace," Power told the council.
The move came after UN Secretary-General Ban Ki-moon warned in a report that South Sudan faced a "very real risk of mass atrocities" and that peacekeepers would not be able to stop such a bloodbath.
Returning from a visit to South Sudan, the UN's adviser on genocide prevention told the council that he was dismayed by what he saw.
"I saw all the signs that ethnic hatred and targeting of civilians could evolve into genocide if something is not done now to stop it," Adama Dieng told the council.
He cited the widespread perception that President Salva Kiir's army was "increasingly ethnically homogenous", composed mostly of Dinka who are preparing to launch attacks against ethnic Nuer and other groups.
Dieng urged the Security Council to impose an arms embargo to halt the "devastating" flow of weapons fueling the war.
The world's youngest nation, South Sudan descended into war in December 2013, leaving tens of thousands dead and more than 2.5 million people displaced.
The country won independence from Sudan in 2011, with strong support from the United States.
A peace deal between Kiir and rebel leader Riek Machar in August last year had raised hopes of peace, until clashes erupted in Juba four months ago.
