"The Department of State has designated German citizen Denis Cuspert as a Specially Designated Global Terrorist [SDGT]," the US foreign ministry said in a statement.
SDGT is a category created two weeks after the September 11, 2001 attacks, which allows the US to freeze a person's assets and legally prohibit American citizens from making any business or financial transactions with them.
"Now calling himself Abu Talha al-Almani, Cuspert has pledged an oath of loyalty to Abu Bakr al-Baghdadi and appears to serve as an [Isis] recruiter with a special focus on recruiting German speakers," the State Department said.
The US diplomats note that Cuspert has been a member of Isis since 2012 and cite his numerous appearances in the group's videos - including one in which he brandishes the severed head of a prisoner - as evidence of his involvement.
"Cuspert is emblematic of the type of foreign recruit [Isis] seeks for its ranks," they say.
The sought recruits were typically "Individuals who have engaged in criminal activity in their home countries who then travel to Iraq and Syria to commit far worse crimes against the people of those countries."
Cuspert was born in 1975 to German and Ghanaian parents.
His rap career under the name Deso Dogg began in 2002, but by 2010 he was in contact with fundamentalist extremists in Berlin.
German prosecutors are investigating Cuspert along with a number of other German "foreign fighters".