The US president accused Kim Jong-un’s government of supporting “acts of international terrorism” including assassinations on foreign soil.
He said: “The United States is designating North Korea as a state sponsor of terrorism. Should have happened a long time ago.”
The rogue state “must end its unlawful nuclear and ballistic missile development,” he added.
North Korea joins Sudan, Syria and Iran as countries that the state department identifies as ones that have “repeatedly provided support for acts of international terrorism”.
The White House hinted recently that Mr Trump, who has traded personal barbs and insults with Jong-un, was considering reinstating North Korea to the “troublesome” list because of its nuclear ambitions and cyber attacks on the US and other countries.
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It was previously removed by George W Bush during a failed attempt to salvage a nuclear deal.
The US treasury department will today announce new, tougher penalties against the nation.
Mr Trump added: “It will be the highest level of sanctions.”
US officials referred to the killing of the despot’s estranged halfbrother in a Malaysian airport this year as an act of terrorism.
Mr Trump also mentioned student Otto Warmbier, 22, who died after being returned from North Korean detention to the US in an unconscious state.
He had been sentenced to 15 years hard labour after confessing to trying to steal a banner.
North Korea is pursuing nuclear weapons and missile programmes in defiance of UN Security Council sanctions and has made no secret of its plans to develop a missile capable of hitting the US mainland.
It has fired two missiles over Japan. South Korea’s spy agency said last night that the North may conduct additional missile tests this year to polish up its long-range technology.
US officials have privately argued North Korea does not meet the evidence criteria for the “terror” designation.
Experts also say the move will be largely symbolic as the US has already imposed heavy sanctions.