The 10-year-old Green Without Borders (GWB) conducts activities like tree-planting to protect Lebanon's environment.
However, the US Treasury said, "In reality, it has served as a cover for Hezbollah's activities in southern Lebanon along the Blue Line, where GWB has outposts manned by Hezbollah operatives in more than a dozen locations."
Those outposts are cover for underground warehouses and tunnels where Hezbollah stores munitions, the Treasury alleged.
In addition, the outposts are used by Hezbollah for weapons training and patrolling, the Treasury said.
It said Hezbollah's activities have impeded the operations of UN peacekeepers along the Lebanon-Israel border.
"Collaboration between GWB and Hezbollah is widely reported in the media, including by official Hezbollah media outlets," the Treasury said.
It also named Green Without Borders leader Zuhair Subhi to its sanctions blacklist.
Hezbollah is the only Lebanese faction that kept its weapons after the end of the 1975-1990 civil war. It is considered a "terrorist" organization by many Western governments.
Treasury sanctions general forbid US individuals and businesses from any transactions with those named.
Israel has also accused Hezbollah of using Green Without Borders as a cover, though in 2017 a United Nations peacekeeping mission in the region said it had seen nothing to support that claim.
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