The ban encompasses the entire Atlantic coast and eastern Gulf of Mexico, as well as the Pacific coast off California, Oregon and Washington, and a section of the Bering Sea off Alaska.
The White House said more than 625 million acres (253 million hectares) of waters would be protected.
"As the climate crisis continues to threaten communities across the country and we are transitioning to a clean energy economy, now is the time to protect these coasts for our children and grandchildren," Biden said in a statement.
"In balancing the many uses and benefits of America's ocean, it is clear to me that the relatively minimal fossil fuel potential in the areas I am withdrawing do not justify the environmental, public health, and economic risks that would come from new leasing and drilling," he added.
Shortly after the announcement was made, Trump said in an interview with a conservative radio host: "It's ridiculous. I'll unban it immediately... I have the right to unban it immediately."
But the ban does not have an end date and could be legally -- and politically -- tricky for Trump to overturn.
Biden is taking the action under the Outer Continental Shelf Lands Act of 1953, which gives the federal government authority over the exploitation of offshore resources.
The law however does not expressly provide for presidents to unilaterally reverse a drilling ban without going through Congress.
- 'Epic ocean victory' -
During his campaign, Trump pledged to "unleash" domestic fossil fuel production in a bid to lower gas costs, despite the country already seeing record high extraction rates.
After US media reported that Biden would issue such a ban, Karoline Leavitt, Trump's incoming press secretary, called the move "a disgraceful decision designed to exact political revenge on the American people who gave President Trump a mandate to increase drilling and lower gas prices."
Environmental pressure groups, on the other hand, welcomed the decision.
"This is an epic ocean victory!" said Joseph Gordon, the climate and energy director for Oceana.
"Our treasured coastal communities are now safeguarded for future generations," he said.
John Calvelli, the executive vice president of public affairs at the Wildlife Conservation Society, also welcomed the move, calling it "great news" for ocean wildlife.
"It is an important step by the United States to help achieve the global goal of protecting at least 30 percent of land and waters by 2030 to halt nature loss and climate change," he said in a statement.
The move is the latest in a string of last-minute climate policy actions by the Biden administration ahead of Trump's return to the White House.
In mid-December, the outgoing administration issued an ambitious new climate target under the landmark Paris accord, committing the United States to reducing greenhouse gas emissions by 61-66 percent below 2005 levels by 2035, on the path to achieving net zero by 2050.
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