US officials have confirmed the country has discovered its first case of BSE.
Confirmation of BSE in the dairy cow tissue is set to cost the US billions
British scientists found the disease in tissue flown in from a dairy cow from the north-western state of Washington.
The animal is believed to have contracted BSE, or bovine spongiform encephalopathy, after eating contaminated feed.
Experts have predicted the news will cost the previously-booming US cattle industry billions of dollars, as countries around the world rush to ban American beef imports.
Japan, Mexico and South Korea - the three top importers of US beef - are already leading a list of more than a dozen countries to ban US meat.
The European Union has banned most US beef for many years because of growth hormones.
BOVINE SPONGIFORM ENCEPHALOPATHY
First surfaced mid-1980s
Can pass to humans through infected beef products
Human form of disease called vCJD
vCJD has killed 137 people, mainly in the UK
The US dollar and Japanese stock markets fell earlier as the suspected case was announced, while cattle futures slumped as far as markets allow.
Shares in McDonald's fell by about 5% on the New York Stock Exchange, although the burger giant said its supply chain was not linked to the suspected case.
The US Department of Agriculture is expecting more information on the infected tissue from experts at Veterinary Laboratories Agency in Weybridge, Surrey, by the end of the week.
BSE has been linked to new variant Creutzfeldt-Jakob Disease (vCJD), a human brain-wasting disease.
First diagnosed in Britain in 1986, BSE affected 178,000 British cattle and resulted in the eventual destruction of 3.7 million animals.
It cost British farming billions of pounds as countries around the world banned British beef.