The policy announced on Friday has a goal of cutting back on nicotine levels in order to discourage addiction and lower the number of US smokers.
The FDA says tobacco is responsible for 480,000 American deaths each year, and $300bn (Â£228bn) in medical costs.
Stock market shares of tobacco plummeted after the plan was announced.
On the New York Stock Exchange, shares in Altria dropped by up to 17%, British American Tobacco's stock fell as much as 11%, and Philip Morris dropped by 7% before they all recovered some of their losses.
"The overwhelming amount of death and disease attributable to tobacco is caused by addiction to cigarettes - the only legal consumer product that, when used as intended, will kill half of all long-term users," FDA Commissioner Scott Gottlieb said in a statement.
The goal, Mr Gottlieb added, is to "render cigarettes minimally addictive" by reducing the amount of the harmful and addictive chemical, which they say is the leading cause of preventable death in the US.
Tobacco companies, such as British American Tobacco (BAT), said the announcement will lead to innovation in the industry.
"Dr Gottlieb's comments regarding nicotine and menthol do not come as a surprise to us," said a BAT spokeswoman.
"We believe future success will require transformative, innovative products and changing the conversation about tobacco harm reduction," Joanne Walia told the BBC, adding that their American subsidiary Reynolds American Inc, will continue "the transformation of the tobacco industry".
The agency announced that they will also look into flavoured-tobacco, such as menthol, during this "public dialogue" period, ahead of a firm policy recommendation.
The policy will also apply to e-cigarettes, which are also known as tobacco vaporisers.
The US Food and Drug Administration (FDA) is seeking to limit nicotine content in tobacco products, for the first time in its history.