Maung Maung Soe is among a host of world figures blacklisted by the US over human rights and corruption allegations.
The crisis in Myanmar has seen more than 650,000 Rohingya flee for neighboring Bangladesh since August.
Myanmar’s military says it is fighting Rohingya militants and denies targeting civilians.
The exodus began earlier this year when Myanmar’s army launched a counter-insurgency operation in northern Rakhine state after militants attacked police posts and killed members of the security forces.
Many who reached Bangladesh – some with bullet or other wounds – said Burmese troops backed by local Buddhist mobs had burned their villages and attacked and killed civilians.
The UN has described the military offensive in Rakhine as a “textbook example of ethnic cleansing”.
In its statement, the US Treasury said Maung Maung Soe “oversaw the military operation in Burma’s Rakhine State responsible for widespread human rights abuse against Rohingya civilians”.
Last month he was transferred from his post, but Myanmar’s Ministry of Defense gave no reason for the move.
This week, the UN’s investigator into human rights in Myanmar was barred from entering the country.
The government said they barred Yanghee Lee because she was “not impartial and objective”, but Ms Lee said the decision suggested “something terribly awful” was happening in Rakhine./BBC