It said the action is intended to hold the PLO and PA "accountable" for undermining prospects for peace.
It is unclear if the move will stop Palestinian Authority President Mahmoud Abbas from attending the UN General Assembly.
The State Department accused PA officials of contributing to the breakdown of ceasefire talks by pursuing legal cases against Israel through international courts.
The State Department said the PA’s Mission, the body that represents Palestinian interests on the global stage, will receive “waivers per the UN Headquarters Agreement.”