"The people are suffering and they are dying," he said.
Venezuela's Defence Minister Vladimir Padrino said President Trump's suggestion was "an act of craziness".
President Nicolas Maduro's new constituent assembly has been widely criticised as anti-democratic. The US recently imposed sanctions on President Maduro, branding him a dictator.
"We have many options for Venezuela, including a possible military option if necessary," Mr Trump told reporters on Friday evening.
"We have troops all over the world in places that are very far away. Venezuela is not very far away and the people are suffering and they're dying."
The White House later said that President Maduro had requested a phone call with the American president.
In response, the White House said Mr Trump would gladly speak to his Venezuelan counterpart, when democracy had been restored in the country.
Regional pressure on the Venezuelan government has continued, with Peru ordering the expulsion of the Venezuelan ambassador from Lima after Caracas sent an "unacceptable" response to regional condemnation of its new constituent assembly.
The ambassador, Diego Molero, has five days to leave Peru, officials say.
The move by Peru's foreign ministry, announced in a statement on Twitter (in Spanish), follows the condemnation by 11 other major countries in the Americas of Venezuela's controversial constituent assembly.
The new body has the ability to rewrite the constitution and could override the opposition-controlled parliament, the National Assembly.
In a separate development, Peruvian President Pedro Pablo Kuczynski, a fierce critic of Mr Maduro, has urged him to resign, saying he lost any credibility after the election of the new body.
"He's a dictator and has carried out a coup through a fraudulent election to eliminate Congress," Mr Kuczynski told Reuters news agency.
Mr Kuczynski also rejected an offer from Mr Maduro to meet face-to-face.
The Venezuelan opposition, which boycotted the election for the constituent assembly, accuses Mr Maduro of trying to cling on to power, which he denies.
The president has repeatedly said that the new assembly would bring peace to the country.
Violent demonstrations since April have left more than 120 people dead in the country.
US President Donald Trump has said he is not ruling out a military option in dealing with the crisis in Venezuela.