Those who have completed the inoculation programme are now allowed to stop using face coverings outdoors in crowds and in most indoor settings.
Social distancing can also cease, according to the Centers for Disease Control and Prevention (CDC).
"If you are fully vaccinated, you no longer need to wear a mask," President Biden said, summarising the new guidance. ”Get vaccinated - or wear a mask until you do."
The guidance still calls for wearing masks in crowded indoor settings like buses, planes, hospitals, prisons and homeless shelters.
However, it will help clear the way for reopening workplaces, schools, and other venues - even removing the need for social distancing for those who are fully vaccinated.
The Biden administration has faced pressure to ease restrictions on fully vaccinated people - those who are two weeks past their last required Covid-19 dose - in part to highlight the benefits of getting the jab.
The country's aggressive vaccination campaign has paid off - US virus cases are at their lowest rate since September, deaths are at their lowest point since last April and the test positivity rate is at the lowest point since the pandemic began.
The new guidance is likely to open the door to confusion, since there is no sure-fire way for businesses or others to distinguish between those who are fully vaccinated and those who are not.
"We've gotten this far - please protect yourself until you get to the finish line," Mr Biden said, noting that most Americans under 65 are not yet fully vaccinated.
He said the government was not going to enforce the mask wearing guidance on those not yet fully vaccinated.
"We're not going to go out and arrest people," he added.
"If you haven't been vaccinated, wear your mask for your own protection and the protection of the people who also have not been vaccinated yet."
To date about 154 million Americans, more than 46 per cent of the population, have received at least one dose of a Covid-19 vaccine and more than 117 million are fully vaccinated.
The rate of new vaccinations has slowed in recent weeks, but with the authorisation on Wednesday of the Pfizer shot for children ages 12 to 15, a new burst of doses is expected in the coming days.
"All of us, let's be patient, be patient with one another," Mr Biden said, acknowledging some Americans might be hesitant about removing their masks.
The pandemic has killed more than 580,000 in the US and more than 3.3 million people worldwide.