The decision by US Fish and Wildlife Service comes after a 20-year programme to grow the wolf population.
|The gray wolf is a species of canid native to the wilderness and remote areas of North America, Eurasia, and North Africa. It is the largest member of its family, with males averaging 95–100 lbs, and females 80–85 lbs.|
Environmental groups threatened legal action against the move.
There were once almost two million gray wolves in North America, but they were nearly wiped out by fur traders and hunters in the 1930s.
In the 1990s, 14 wolves from Canada quickly reproduced after they were released in Yellowstone National Park in north-west Wyoming.
There are now thought to be about 270 wolves outside Yellowstone in the western US state.'Tragic ending'
Under the new rules, Wyoming must maintain at least 10 breeding pairs of wolves and no fewer than 100 animals.
But ranchers and farmers in Wyoming have long argued that wolves prey on their livestock and want to be able to control the population.
Wyoming Governor Matt Mead said: "The wolf population in Wyoming is recovered, and it is appropriate that the responsibility for wolf management be returned to the state."
Gray wolves will continue to be protected in some areas of the state.
But Jamie Rappaport Clark, president of Defenders of Wildlife, called it "a tragic ending to what has otherwise been one of America's greatest wildlife conservation success stories".
He added that his group would take legal action to ensure protections for wolves are reinstated.
The director of the US Fish and Wildlife Service acknowledged there would be opposition to the decision.
"You're going to hear, I think, a fair amount of rhetoric of unregulated killing and trapping and open seasons and free-fire zones," Dan Ashe said.
Wolves in the Grand Teton and Yellowstone national parks, the John D Rockefeller Jr Memorial Parkway and the Wind River Indian Reservation will be protected from hunting.
The new rules will come into effect on 30 September.
There are about another 1,100 wolves in the states of Montana and Idaho, and still more in Washington and Oregon.