Israel says it will join the US in pulling out of the UN's cultural organisation after US officials cited "anti-Israel bias".
Israeli Prime Minister Benjamin Netanyahu praised the US decision as "brave and moral" in a statement.
The agency is known for designating world heritage sites such as Syria's Palmyra and the US Grand Canyon.
Its head, Irina Bokova, earlier called the US withdrawal a matter of "profound regret".
She said "politicisation" had "taken its toll" on the organisation in recent years.
The withdrawal represented a loss to the "UN family" and to multilateralism, Ms Bokova said.
The US withdrawal will become effective at the end of December 2018 - until then it would will remain a full member. It will establish an observer mission at the Paris-based organisation to replace its representation, the state department said.
Hours after the US announced its withdrawal, the Israel joined in, with Prime Minister Benjamin Netanyahu saying he had instructed his foreign ministry to begin preparations to leave.
As well as accusing UNESCO of bias, the US state department said it was also concerned about mounting financial arrears at the agency and said it should be reformed.
The decision follows a string of UNESCO decisions that have drawn criticism from the US and Israel.
In 2011 the US cut its funding to the agency - slashing its budget by 22 percent - in protest at its decision to grant full membership to the Palestine.
And last year, Israel suspended cooperation with it after the agency adopted a controversial resolution which made no reference to Jewish ties to a key holy site in Jerusalem.
The resolution also criticised Israel's activities at holy places in Jerusalem and the occupied West Bank.
Mr Netanyahu condemned the agency this year for declaring the old city of Hebron in the West Bank a Palestinian World Heritage site.
He accused it of ignoring Judaism's ancient connection to the city, which includes the crypt where its matriarchs and patriarchs are buried.
The US withdrawal was also motivated by a desire to stop accruing arrears to the agency, Foreign Policy magazine reported. The US more than $US80m of funding to the agency amid the furore over Palestinian membership six years ago, but continued to be charged, and now owes more than $US500m, the magazine said.
Mr Trump has criticised what he sees as a disproportionate contribution by the US to UN institutions. The US funds 22 percent of the UN's regular budget and 28 percent of UN peacekeeping.
The US was a founding member of UNESCO. The Reagan administration withdrew from the organisation in 1984 - accusing the agency of corruption and an ideological bias towards the then Soviet Union - but the US rejoined in 2002.
The agency is in the process of choosing a new leader, with Qatari and French former ministers Hamad bin Abdulaziz al-Kawari and Audrey Azoulay neck-and-neck in the contest to replace Ms Bokova.
• November 1945: UNESCO founded by 37 countries in the immediate aftermath of World War II, its purpose "to contribute to peace and security by promoting collaboration among nations through education, science and culture".
• 1974: US Congress suspends contribution after UNESCO criticises Israel and recognises the Palestinian Liberation Organisation (PLO) - but later rejoins.
• 1984: Under President Ronald Reagan, US withdraws from UNESCO, saying the agency was politically left wing and financially irresponsible.
• 1985: UK withdraws, rejoining under change of government in 1997.
• 2003: US rejoins under George W Bush.
• 2011: US withdraws funding in protest at Palestinian membership of UN; arrears begin to accumulate.
• 2017: US announces it will withdraw entirely; Israel says it will follow suit.