The United States on Thursday accused Afghanistan's government of failing to fight corruption and cut more than $160 million in direct funding, a little over a week before the country's elections.
"We stand against those who exploit their positions of power and influence to deprive the Afghan people of the benefits of foreign assistance and a more prosperous future," Secretary of State Mike Pompeo said in a statement.
Mr Pompeo said the United States was suspending work with the Afghan body in charge of monitoring corruption as it was "incapable of being a partner".
"We expect the Afghan government to demonstrate a clear commitment to fight corruption, to serve the Afghan people and to maintain their trust," he said.
"Afghan leaders who fail to meet this standard should be held accountable."
Mr Pompeo said the US was taking back $100m committed for a major energy project, saying that Washington would instead fund it directly rather than sending the money to Afghan authorities.
He said the US would also withhold $60m in planned assistance to Afghanistan's procurement authority.
While Washington has long complained of graft in Afghanistan, the last-minute criticism comes after friction with President Ashraf Ghani over US talks with the Taliban.
Mr Ghani, who is up for re-election on September 28, voiced strong concern over a draft accord with the Taliban under which the United States would withdraw troops.
President Donald Trump, who had invited Mr Ghani and the Taliban to the United States, eventually declared the talks dead, citing an attack by the insurgents that killed a US soldier.
Mr Trump has been eager to pull out troops and end America's longest-ever war, launched after the September 11, 2001 attacks.