The contamination was traced to a plant in Blakeley
US officials are to open a criminal probe into an outbreak of salmonella poisoning that has made more than 500 people ill and may have killed eight.
The Food and Drug Administration (FDA) said it had found widespread contamination at a processing plant run by Peanut Corporation of America (PCA).
The company says it is co-operating with the inquiry. Its plant in Blakely, Georgia, has been shut down.
More than 400 food products containing PCA peanut butter have been recalled.
The FDA said it carried out an inspection of the Blakely plant in January, after it was identified as a possible source of the contamination.
The inspection found that the plant was "not compliant with Current Good Manufacturing Practices required by the FDA".
It uncovered problems related to cleaning procedures as well as a "failure to implement steps to mitigate Salmonella contamination in the facility".
Stephen Sundlof of the FDA said his organisation would join the Justice Department to investigate the criminal allegations.
A total of 529 people in 43 US states are reported to have fallen ill with the outbreak strain of Salmonella Typhimurium between 1 September 2008 and 16 January 2009, said the US Centers for Disease Control and Prevention (CDC).
Salmonella causes diarrhoea, vomiting and fever
One case was also reported in Canada, and more than half of those affected were under 16 years old.
Eight deaths have also been reported, which the FDA said "appeared to be associated with the outbreak".
PCA announced a voluntary recall of its peanut butter on 13 January and has apologised "to peanut consumers everywhere" for the crisis.
"We want our customers and consumers to know that we are continuing to work day and night with the FDA and other officials to determine the source of the problem and ensure that it never happens again," it said in a statement.
The company has not denied that its plant was the source of the contamination, but said there were "some inaccuracies" in the FDA report.
Officials said national brands of peanut butter have not been affected, but they have warned consumers to be cautious with peanut products produced by smaller companies.
The White House had described the outbreak as "alarming" and called for greater oversight of food safety standards.
Symptoms of salmonella, which usually appear within 12 to 72 hours of eating contaminated food, include diarrhoea, nausea and vomiting, headaches, stomach cramps and fever.
The symptoms can last for several days but most otherwise healthy people make a full recovery within a week.