Mr Ahmadinejad was sanctioned for having provided support to Iran's Ministry of Intelligence and Security, which was also designated for its involvement in the hostage-taking or wrongful detention of US citizens.
“Today’s action targets Mahmoud Ahmadinejad for enabling the wrongful detention of our citizens, causing immeasurable pain and suffering for both the victims and their families,” said Brian Nelson, Treasury's undersecretary for terrorism and financial intelligence.
Iran's Ministry of Intelligence and Security was involved in the detentions of former FBI agent Robert Levinson, as well as hikers Shane Bauer, Joshua Fattal and Sara Shourd during Mr Ahmadenijad's term in office, from 2005-2013.
The three hikers were eventually released, but Mr Levinson remains missing and is presumed dead, the Treasury Department said in a news release.
As part of the deal to secure the release of the five detained Americans, the US released five Iranians and unfroze $6 billion in Iranian funds.
US National Security Council spokesman John Kirby first announced the sanctions while the five American detainees were in transit from Iran to Qatar. He added that the sanctions would not complicate the deal.
“All this was carefully choreographed,” he told CNN.
Mr Kirby also said Monday's sanctions display to Tehran that the US will “hold Iran accountable”.
The released Americans arrived in Doha on Monday.