The decision is in line with Trump's declaration on Thursday that America would exit Syria "very soon" and "let the other people take care of it now".
Trump ordered the freeze after reading a news report noting that the US had recently committed an additional 200 million dollars, reported the Wall Street Journal.
The funding was to be used for basic infrastructure projects, such as restoring power and water and rebuilding roads.
Secretary of State Rex Tillerson announced the funding in February at an aid conference in Kuwait.
According to the reports, the hold on the aid isn't necessarily permanent.
As per the officials, this will be dwelled upon at senior-level interagency meetings this week, including a National Security Council meeting, to address the status of the anti-ISIS campaign.
Trump has appeared increasingly eager for an early US exit from Syria.
"By the way, we're knocking the hell out of ISIS. We'll be coming out of Syria like very soon. Let the other people take care of it now," Trump told a crowd in Ohio during a speech on infrastructure spending on Thursday.
"We are going to have 100 percent of the caliphate, as they call it, sometimes referred to as land ... But we are going to be coming out of there real soon. We are going to get back to our country, where we belong, where we want to be," the US President added.