The announcement comes two days after a plane carrying New York Yankees pitcher Cory Lidle above the East River slammed into a skyscraper.
The new ban will affect small aircraft, but not helicopters, that previously have been allowed to fly along the river, which runs along the east side of Manhattan Island. All air traffic along the river has been limited to 1,100 feet in altitude.
Federal officials on Friday wound up an onsite investigation of Wednesday's crash that killed Lidle and Tyler Stanger, a 26-year-old flight instructor from California.
The FAA said a review of operations and procedures in the East River corridor prompted the rule change, which will require pilots of small, fixed-wing aircraft to obtain approval from air traffic controllers before entering the area.
The flight restrictions go into effect immediately, the FAA said.
New York Gov. George Pataki and Sen. Charles Schumer, D-N.Y., had asked the FAA on Thursday to require anyone flying near Manhattan to be under the supervision of air traffic controllers.
"A smart terrorist could load up a small, little plane with biological, chemical or even nuclear material and fly up the Hudson or East rivers, no questions asked," said Schumer.
Schumer said the Lidle crash should be "a wake-up call to the FAA to re-examine flight patterns, which, amazingly enough, they haven't done since 9/11." The date refers to the Sept. 11, 2001, terrorist attack when two airliners were flown into the World Trade Center.
However, the FAA said it changed the rule because of safety rather than security considerations.
"You get some real strange winds going through those canyons of buildings," said Bill Waldock, aviation safety professor at Embry-Riddle Aeronautical University at Prescott, Ariz.
"It's a weird area to try to maneuver airplanes in anyway," Waldock said.
Meanwhile, National Transportation Safety Board investigators said they believe the propellers were turning when Lidle's plane collided with a Manhattan building, but.
The plane started making a U-turn about a quarter-mile from a crop of residential towers, killing Lidle and his flight instructor. Such a turn in the narrow East River corridor would be difficult in a Cirrus SR20 for anyone, but especially for relatively inexperienced pilots like Lidle and Stanger — both of whom were from California — reports CBS News correspondent Randall Pinkston.