Secretary of State Hillary Clinton will make the announcement in Washington during a meeting with Somalian President Hassan Sheikh Mohamud set for Thursday, according to reports by the BBC.
"The fact that we recognise a government there will allow us to do things through USAID that we have not been able to do before. The fact that we recognise them as a legitimate government will allow the World Bank ... to do things that they would not have been able to do before," a senior American official told Reuters on Wednesday.
"This is major and it is significant," the official added.
Once recognized, State Department officials could begin plans to reestablish a U.S. Embassy in the Somalian capital of Mogadishu, which was shuttered after the disintegration of the country's central government in 1991.
While Washington never formally broke diplomatic ties with Somalia, it withdrew support to the country after a failed American-led peacekeeping mission in 1993 that ended with the deaths of 18 American service members.
Shortly after the Black Hawk Down fiasco, rival Somali warlords battled for control of the country creating a power vacuum that was eventually filled by al Qaeda-linked groups like al Shabab and Boko Haram.
Al Shabab, the East African faction of al Qaeda, has been carrying out terrorist attacks against local military forces in and around Somalia since the 1990s.
But in the decades since then, armed forces from the African Union and other power brokers in the region — such as Ethopia and Kenya — have battled back against militant factions in Somalia, creating breathing room for the Somali central government to regain control of the country.
Those indigenous forces, backed by the United States, have "broken the back" of militant extremists in Somalia and brought the country back from the brink of becoming a full-fledged radical Islamic state, Assistant Secretary of State Johnnie Carson told reporters on Wednesday.