The State Department says Saudi citizen Saleh al-Qarawi is a high-ranking operative for the Abdullah Azzam Brigades in Lebanon. The group has claimed responsibility for the bombing of a Japanese oil tanker last year and for several rockets fired from Lebanon into Israel.
The move freezes any assets held by al-Qarawi in the United States and bans Americans from doing business with him.
The department said that before moving to Lebanon, al-Qarawi fought American forces in Fallujah, Iraq, and worked alongside killed al-Qaida in Iraq chief Abu Musab al-Zarqawi.
It said al-Qarawi is wanted for extradition by Saudi Arabia for extremist activity.