The Agriculture Department said in a statement the change would give American schools "greater flexibility" and stop kids from throwing out the less appetizing food mandated under the scheme.
Forcing schools to adopt better nutritional standards under the 2012 Healthy, Hunger-Free Kids Act if they wanted federal subsidies for meals was one of Michelle Obama's key achievements.
Lauded by supporters in the US as crucial in the fight against childhood obesity, the initiative put restrictions on sodium and sweetened milks, and required school lunches to increase the amount of whole-grain foods they contained.
The Trump administration's backtrack on the measure came the same day as a study suggesting that if American children exercised more, tens of billions of dollars in medical costs could be saved over their lifetimes.
The finding was made by researchers at Johns Hopkins University's Bloomberg School of Public Health. According to the US Centers for Disease Control and Prevention, about one in six American children are overweight or obese.
The Agriculture Department said the nutritional requirements imposed on schools in the past five years had added $1.2 billion in costs to school districts and to states.
It said easing those rules would decrease costs, give back greater control to local authorities, and see children eating more enthusiastically.
"If kids aren't eating the food, and it's ending up in the trash, they aren't getting any nutrition –- thus undermining the intent of the program," Agriculture Secretary Sonny Perdue said.
At the same time, the Trump administration discontinued another signature program by Michelle Obama and her husband Barack Obama.
The 2015 scheme designed to promote educational opportunities for adolescent girls in developing countries, called "Let Girls Learn," was being immediately scrapped, CNN reported on the basis of an internal email it had obtained.
The email, sent to members of the US Peace Corps, a US government overseas volunteer program, said some parts of "Let Girls Learn" would continue, but the name was being dropped along with its standalone status.