Secretary-General of the United Nations, Antonio Guterres. Photo: Reuters
The State Department said it was dropping the funding because the UN Population Fund "supports, or participates in the management of, a program of coercive abortion or involuntary sterilization."
UN spokesman Stephane Dujarric said on Tuesday that Guterres "believes that the decision is based on an inaccurate perception of the nature and importance of the work done by UNFPA."
The cut marks US President Donald Trump's first move to curtail funding for the United Nations and its agencies.
UN agencies such as the UNFPA are funded by governments voluntarily. The United States was the fourth largest voluntary donor to UNFPA in 2015, giving $75 million in core budget and earmarked contributions.
The State Department said the funding was cut because UNFPA works with the Chinese government, which "employs measures such as coercive abortion and involuntary sterilization to carry out its population-control policies."
"While there is no evidence that UNFPA directly engages in coercive abortions or involuntary sterilizations in China, the agency continues to partner with the (government) on family planning, and thus can be found to support, or participate in the management of China's coercive policies," it said.
The UN Population Fund is focused on family planning as well as maternal and child health in more than 150 countries.
"The Secretary-General deeply regrets the decision by the United States to cut financial support for the UN Population Fund, which could have devastating effects on the health of vulnerable women and girls and their families around the world," Dujarric told reporters.
He said Guterres appealed to donors to increase their support. Britain, the top donor to UNFPA, continues to support the agency, British UN Ambassador Matthew Rycroft said.
Chinese UN Ambassador Liu Jieyi told reporters he hoped "that the UN agencies will receive the necessary resources to carry out their duties on behalf of the international community and for the benefit of the international community."