The US sanctions prohibit new investments and exports of financial services to and imports from Myanmar, formerly known as Burma.
The US has also frozen the assets of Myanmar's leaders in the US and denied visas for government officials.
Myanmar's military government prevented the National League for Democracy party led by Aung San Suu Kyi, a Nobel Peace Prize laureate, from taking office despite winning the elections in 1990.
Human rights groups say 1,100 political detainees continue to be held in 42 prisons and 91 concentration camps in Myanmar.
The government has defended its reforms process and has accused the US of plotting to install a puppet regime in the country.
'More brutal'
Tony Snow, a White House spokesman, said the president was determined to support "those who are struggling to end tyranny" in Myanmar.
Nobel laureate Aung San Suu
Kyi has spent most of the last
17 years under house arrest [AFP]
In a statement, he said the State Peace and Development Council - the military government's official name - has become "only more brutal, more repressive and more indifferent" to international pressure.
The government has increased attacks on ethnic groups, harassed and detained democracy activists, and arrested people seeking to pray at pagodas for the release of Aung San Suu Kyi and other political prisoners, he charged.
"These recent actions take place against a backdrop of ongoing grave human rights violations, including the use of rape as a weapon against civilian populations and conscription of child soldiers."
He urged the government to release all political prisoners to facilitate "a genuine dialogue between all stakeholders" and "national reconciliation".
Snow also said Myanmar's neighbours should "condemn unequivocally" the government's adamant stand against returning the nation to democratic rule.
The country's Asean neighbours have traditionally adopted the position of non-interference in Myanmar's internal politics but early this year voiced concern at the slow pace of democratic reforms.