Toyota plans to make the Lexus ES 350 saloon at its Kentucky plant in 2015.
Toyota announced that it will invest $360 million (£235 million) at the Georgetown factory, which assembles the Toyota Camry and other models. The move will generate 750 new jobs.
About 50,000 saloons will be produced each year, bringing the plant's total production capacity to more than 550,000 vehicles.
"It is fitting the first country to build the ES outside of Japan is the United States, because this is home for Lexus - it is where the brand was founded and it is still the biggest market for the luxury brand," Akio Toyoda, the president of Toyota, said during a news conference in New York.
Expanding U.S. production fits in with Toyota's strategy to make cars in the markets where its customers live.
The ES saloon was the second most popular Lexus model in the United States last year after the RX sport utility vehicle.
The ES represented 9.2 per cent of sales in the U.S. market for entry-level luxury cars in 2012, according to data from Kelley Blue Book.
The move also counters the effect of the strong yen, which has made exporting from Japan expensive.
Converting overseas profits back into the yen has pinched profits.
The yen's decline since last year has not changed that strategy.
"This decision is in line with two key goals," Toyoda said.
"First, to serve our U.S. customers. And second, reduce the effect of the exchange rate on our customers."