The Department of Defense (DoD) - which oversees the US armed services - is the successor to the War Department, which was first established as a cabinet-level agency in 1789 and existed until 1947.
The executive order says: "The name 'Department of War' conveys a stronger message of readiness and resolve compared to 'Department of Defense,' which emphasizes only defensive capabilities."
"I think it's a much more appropriate name, in light of where the world is right now," Trump said in the Oval Office on Friday, adding that "it sends a message of victory".
The order says Secretary of Defense Pete Hegseth will be known as secretary of war. It instructs him to recommend and include legislative and executive actions to move towards a permanent renaming of the department.
Speaking during the signing, Hegseth said that "this name change is not just about renaming, it's about restoring", adding "words matter".
"We're going to go on offence, not just on defence. Maximum lethality, not tepid legality. Violent effect, not politically correct," he said. "We're going to raise up warriors, not just defenders."
The Pentagon's website changed to war.gov late on Friday, along with the headline 'U.S. Department of War'.
