In his continued role as first secretary of the ruling Communist Party, "Raul Castro oversees a system that arbitrarily detains thousands of Cubans and currently holds more than 100 political prisoners," Secretary of State Mike Pompeo said.
The sanctions mean that the former president - brother of late revolutionary leader Fidel Castro - will be ineligible for travel to the United States.
While the 88-year-old former leader was unlikely to be planning a trip to Disneyland, the order also means that his immediate family will be denied entry into the United States.
Among those barred by the order is his daughter Mariela Castro Espin, who has become a prominent advocate for gay rights and HIV/AIDS awareness.
She visited San Francisco and New York in 2012, drawing an outcry from US-based critics of the Castros.
Pompeo said he also made the legal designation due to Raul Castro's support for Venezuela's leftist leader Nicolas Maduro, who presides over a crumbling economy. "The United States strongly supports the rights of the Cuban and Venezuelan people," Pompeo said in a statement.