President Recep Tayyip Erdogan announced the decision in Ankara during his '100 days performance' meeting on Saturday and said Turkey had been "patient" since the US sanctions were imposed.
"Those who think that they can make Turkey take a step back with ridiculous sanctions have never known this country or this nation," Mr Erdogan said.
"We have never bowed our heads to such pressure and will never do so."
Andrew Brunson, a 50 year old evangelical pastor from Black Mountain in North Carolina, was arrested in December 2016 and later charged with links to a failed plot to overthrow the Turkish government in July 2016.
He faces a prison sentence of up to 35 years if he is convicted of espionage and terror-related charges.
Despite the announcement of sanctions, Erdogan called for a return to the two country's partnership.
Mr Erdogan insisted the row over the pastor shouldn't come between the two country's relationships.
"We think there is no problem we cannot solve with the American administration," he said.
A total disgrace that Turkey will not release a respected U.S. Pastor, Andrew Brunson, from prison. He has been held hostage far too long. @RT_Erdogan should do something to free this wonderful Christian husband & father. He has done nothing wrong, and his family needs him!
— Donald J. Trump (@realDonaldTrump) July 19, 2018
President Donald Trump and Vice President Mike Pence have been very vocal in demanding the release of Mr Brunson.
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