The change will take effect next year, The Guardian reported.
After that time, survey respondents can choose between "black" or "African-American."
The Census Bureau told The Associated Press it made the decision after months of research and public feedback.
Not many black Americans identify as being "Negro" anymore, and many find the term "offensive and outdated," Nicholas Jones, chief of the bureau's racial statistics branch, told the AP.
A Jim Crow-era term, "Negro" was first used in the 1900 census and became a commonly used word to desribe black Americans in the early 20th century.
But during the 1960s, civil rights activists began to reject the word as backwards and offensive.
A former Census Bureau director addressed controversy over the term in a 2010 blog post.
Officials toyed with dropping the word for the census taken that year, but determined a small segment of black Americans still identified themselves that way, former Census Bureau Director Robert Groves wrote in the post.
Those numbers dropped from about 50,000 people in 2000 to 36,000, the AP reported.