The sanctions were declared after Riyadh's public prosecutor announced that five officials face a possible death sentence in the case but exculpated the prince.
"The Saudi officials we are sanctioning were involved in the abhorrent killing of Jamal Khashoggi. These individuals who targeted and brutally killed a journalist who resided and worked in the United States must face consequences for their actions," said Treasury Secretary Steven Mnuchin.
The sanctions came amid widespread anger among Saudi allies over the killing and dismemberment of Khashoggi on October 2 in the Saudi consulate in Istanbul, Turkey.
Khashoggi, 59, was a veteran Saudi journalist who wrote for the Washington Post and other international media. He had become one of the leading public critics of Prince Mohammed, whose father is the Saudi king.
The 17 included Saud Al-Qahtani and Maher Mutreb, key aides of the powerful prince, and Mohammed Alotaibi, who was the consul general in the Istanbul consulate when Khashoggi was murdered.
The US Treasury said Qahtani, Prince Mohammed's long-time right-hand man, "was part of the planning and execution of the operation" to kill Khashoggi.
But it did not point any fingers at Prince Mohammed, who the Saudi government has insisted did not order the killing.
The sanctions, which fall under the US Global Magnitsky Human Rights Accountability Act, freeze any assets those blacklisted have under US jurisdiction, and forbid Americans and US companies from doing business with them.
Under heavy pressure from the United States, Britain, France and Turkey, Riyadh has admitted that Khashoggi was murdered in the consulate and said it would punish those involved.
Earlier Thursday the state prosecutor's office announced that 21 individuals had been taken into custody and charges set against 11 of them.
Five of them face possible execution for the murder, according to the prosecutor.
Mnuchin said Washington would persist in pressuring Riyadh for justice in the case.
"The United States continues to diligently work to ascertain all of the facts and will hold accountable each of those we find responsible in order to achieve justice for Khashoggi's fiancée, children, and the family he leaves behind," he said in a statement.
"The Government of Saudi Arabia must take appropriate steps to end any targeting of political dissidents or journalists."
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