Nasa administrator Jim Bridenstine said Starliner was in "stable orbit" following the issue, however the spacecraft will have to return to Earth earlier than intended.
"The burn needed for a rendezvous with the ISS did not happen. Working the issue," he tweeted.
"Starliner had a Mission Elapsed Time (MET) anomaly causing the spacecraft to believe that it was in an orbital insertion burn, when it was not."
Boeing revealed in a subsequent news conference that Starliner would return within 48 hours after failing its mission to dock with the ISS.
Starliner launched from Florida's Cape Canaveral Air Force Station on Friday, carrying 270 kilograms of cargo and test equipment. Christmas presents for ISS astronauts are also on board.
The Orbital Flight Test mission is meant as a dress rehearsal for future crewed missions, with only a dummy currently riding at the controls.
During a live webcast of the launch, a Boeing spokesperson said the Starliner liftoff marked "a new era of human space flight".
Boeing is one of two private aerospace companies, alongside SpaceX, that Nasa selected in 2014 to develop commercial spacecraft to transport astronauts to the ISS. Earlier this year, SpaceX completed the first test flight of its Crew Dragon capsule, which was also uncrewed.
Nasa currently relies on Russia's Soyuz space shuttle to ferry astronauts to the ISS, however the first crewed SpaceX flight is set to take place early next year.
At a news conference on Tuesday, Mr Bridenstine said the Starliner OFT mission is "the first step in this next venture for commercial crew".
He added: "We have more under development right now than at any point in Nasa's history. We have two commercial crew programmes that are under development and, of course, we've got our big program, which is going back to the moon."
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