The firm faces many thousands of lawsuits from consumers who claim that its talc products caused their cancer.
The move comes after years of litigation where Johnson & Johnson has been ordered to pay out billions of dollars in compensation.
The company has consistently defended the safety of its talc products.
Johnson & Johnson said it would wind down sales of the product, which makes up about 0.5% of its US consumer health business, in the coming months, but that retailers would continue to sell existing inventory.
The firm faces more than 16,000 consumer lawsuits alleging that the company's talc products were contaminated with asbestos, a known carcinogen.
The firm said that demand for Johnson's Baby Powder had been declining in North America "due in large part to changes in consumer habits and fuelled by misinformation around the safety of the product".
It said it had faced "a constant barrage" of lawyers advertising for clients to sue the firm.
"We remain steadfastly confident in the safety of talc-based Johnson's Baby Powder. Decades of independent scientific studies by medical experts around the world support the safety of our product," it said.
The firm added that the move was part of a reassessment of its consumer products prompted by the coronavirus pandemic.
It said in October that its testing had found no asbestos in its Baby Powder after tests conducted by the US Food and Drug Administration discovered trace amounts.
The firm is appealing against a 2018 order to pay $4.7bn (£3.6bn) in damages to 22 women who alleged that its talc products caused them to develop ovarian cancer.