"The Trump Administration is revoking California's Federal Waiver on emissions in order to produce far less expensive cars for the consumer, while at the same time making the cars substantially SAFER," US President Donald Trump wrote on Twitter on Wednesday.
California has already taken steps to block the administration's efforts.
"We will fight this latest attempt and defend our clean car standards," Governor Gavin Newsom had said in a statement on Tuesday, the BBC reported.
The waiver had allowed the state - America's most populous - to set stricter standards than the federal government.
Trump says the move will cut car prices and the impact on emissions will be minimal.
But it is likely to spark a legal battle over states' rights.
California's ability to set its own rules dates back to the 1970s when Los Angeles was blanketed in choking smog.
The state was allowed to set tougher emission standards than the federal government as long as it could provide a compelling reason for why such a waiver was needed. In 1977, other states were allowed to adopt California's stricter standards.
The Golden State's rules have largely become the de-facto benchmark nationwide because car manufacturers do not design different sets of vehicles to meet standards in other states.
The state accounts for about 12 per cent of all vehicle sales.
Emissions control methods first used in California, such as catalytic converters and regulations on oxides of nitrogen, have become commonplace throughout the US.
Thirteen other states and the District of Columbia have already adopted California's stricter exhaust pipe greenhouse gas standards - together representing about a third of the US car market.
( With inputs from IANS )