Dylann Roof is awaiting trial in connection with the massacre at Emanuel AME Church in Charleston, South Carolina, on June 17.
Attorney General Loretta Lynch said: "The nature of the alleged crime and the resulting harm compelled this decision."
The department had considered "all relevant factual and legal issues", she said.
Mr Roof faces federal hate crime charges in connection with the killings, which contributed to a national conversation about race relations and ultimately led to the removal of a Confederate battle flag from the grounds of the South Carolina Statehouse.
He is also charged in state court with nine counts of murder, and South Carolina prosecutors have already announced plans to seek the death penalty when he stands trial on those charges next year.
Roof, who is white, appeared in photos waving Confederate flags and burning or desecrating US flags, and purportedly wrote of inflaming racial violence. Survivors told police that he hurled racial insults during the attack.
Federal prosecutors charged Roof with hate crimes a month after the shooting, saying he was motivated by racial hatred and a desire to commit a "notorious attack" when he opened fire inside the church.
Ms Lynch said at the time: "To carry out these twin goals of fanning racial flames and exacting revenge, Roof further decided to seek out and murder African-Americans because of their race."
Roof's lawyers in the federal case have said their client would be willing to plead guilty if the death penalty were not on the table.
At Roof's initial appearance before a judge, several relatives of the shooting victims said they forgave the alleged shooter and that they would pray for him.
On Tuesday, Malcolm Graham, brother of shooting victim Cynthia Hurd, said prosecutors had talked to family members before announcing the decision and he felt it was "an appropriate punishment".
Mr Graham said: "What he did that night was kill innocent individuals at a Bible study. Not only was it an attack on those who were there, it was an attack on a race of people."
