Human Rights Watch called the move "extremely worrying" and said it suggested a major shift was underway in US policy towards Myanmar's military, which overthrew a democratically elected government in 2021 and has been implicated in crimes against humanity and genocide.
The US Treasury Department did not give a reason for the move.
"Anyone suggesting these sanctions were lifted for an ulterior motive is uninformed and peddling a conspiracy theory driven by hatred for President Trump," Deputy Secretary Michael Faulkender said in a statement.
"Individuals, including in this case, are regularly added and removed from the Specially Designated Nationals and Blocked Persons List in the ordinary course of business."
A notice from the US Treasury Department said KT Services & Logistics and its founder, Jonathan Myo Kyaw Thaung; the MCM Group and its owner Aung Hlaing Oo; and Suntac Technologies and its owner Sit Taing Aung; and another individual, Tin Latt Min, were being removed from the US sanctions list.
KT Services & Logistics and Jonathan Myo Kyaw Thaung were added to the sanctions list in January 2022 under the Biden administration in a step timed to mark the first anniversary of the military seizure of power in Myanmar that plunged the country into chaos.
Sit Taing Aung and Aung Hlaing Oo were placed on the sanctions list the same year for operating in Myanmar's defence sector.
Tin Latt Min, identified as another close associate of the military rulers, was placed on the list in 2024 to mark the third anniversary of the coup.
The White House did not respond to a request for comment.
On July 11, Myanmar's ruling military general, Min Aung Hlaing, asked Trump in a letter for a reduction in the 40 per cent tariff rate on his country's exports to the US and said he was ready to send a negotiating team to Washington if needed.
"The senior general acknowledged the president's strong leadership in guiding his country towards national prosperity with the spirit of a true patriot," state media said at the time.
In his response to a letter from Trump notifying Myanmar of the tariff to take effect on August 1, Min Aung Hlaing proposed a reduced rate of 10 per cent to 20 per cent, with Myanmar slashing its levy on US imports to a range of zero to 10 per cent.
Min Aung Hlaing also asked Trump "to reconsider easing and lifting the economic sanctions imposed on Myanmar, as they hinder the shared interests and prosperity of both countries and their peoples".
Myanmar is one of the world's main sources of sought-after rare earth minerals used in high-tech defence and consumer applications.
Securing supplies of the minerals is a major focus for the Trump administration in its strategic competition with China, which is responsible for 90 per cent of rare earth processing capacity.
Most of Myanmar's rare earth mines are in areas controlled by the Kachin Independence Army, an ethnic group fighting the junta, and are processed in China.
Representative Ami Bera, the top Democrat on the House Foreign Affairs Asia subcommittee, in a statement to Reuters called the decision to lift sanctions against the individuals "a bad idea" that "goes against our values of freedom and democracy".
John Sifton, Asia advocacy director of Human Rights Watch, called the US move "shocking" and its motivation unclear.
"The action suggests a major shift is underway in US policy, which had centred on punitive action against Myanmar's military regime, which only four years ago carried out a coup d'etat against a democratically elected government and is implicated in crimes against humanity and genocide," he said.
