It expanded at an annualised rate of 3.9% between July and September, up from the 3.5% first estimated by the Bureau of Economic Analysis.
The rise, which follows a strong second quarter, means the US has seen its strongest two consecutive quarters of growth for a decade.
Consumer spending was the biggest driver of the raised estimate.
It grew by 2.2% according to the latest estimate, which was higher than the initial calculation of 1.8%.
Consumer spending is closely watched as it accounts for 70% of US gross domestic product (GDP).
The data suggests the US has shrugged off the slow start to the year when heavy snow saw the economy shrink.
"The question of whether the economy is accelerating or will accelerate is no longer a question; we can say somewhat definitively that the economy has already accelerated," said Dan Greenhaus, chief strategist at BTIG.
Meanwhile, a separate survey, showed US house prices rose by more than expected in September.
The closely-watched S&P/Case Shiller index jumped 4.9% year-on-year.
The index, which measures single-family home prices in 20 cities, showed that prices were up 0.3% month-on-month on a seasonally adjusted basis.
"With the economy looking better than a year ago, the housing outlook for 2015 is stable to slightly better," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.
Capital Economics economist Paul Dales said the strong GDP upgrade underlined his expectation that the Federal Reserve could raise interest rates as soon as March next year.
"Most people were expecting a downward revision so this was a real surprise," he added.
At the end of October, the US Federal Reserve said it would not raise interest rates for a "considerable time".
It also ended its quantitative easing (QE) stimulus programme of buying financial assets and creating new money to pay for them, aimed at stimulating the economy.
However, it said it was confident the US economic recovery would continue, despite a global economic slowdown.
The US economy grew much faster in the third quarter than first reported, official figures have shown.