The death of 18-year-old Michael Brown has already given rise to a separate federal investigation into whether Darren Wilson, the police officer who shot him, violated the teenager's civil rights.
But Attorney General Eric Holder told reporters that the Department of Justice had also determined there was cause to investigate "whether Ferguson Police officials have engaged in a pattern or practice of violations of the US Constitution or federal law."
Brown's shooting on August 9 and subsequent violent protests reopened a fierce national debate on race and the tactics used by police in dealing with minorities.
"The decision to go ahead was based not only on what I heard," Holder said, but also public records and other documents involving minorities.
He added that the investigation "is not a stopgap or a short-term solution" but rather "a long-term strategy" meant to build trust, safety and accountability.
In addition, a grand jury is hearing evidence to determine whether Wilson, 28, used excessive force in fatally shooting Brown, who was hit at least six times.
Witnesses have given varying reports as to the circumstances surrounding Brown's death, with some saying the teenager had reached for Wilson's gun, while others, including a friend who was with Brown, said he had his hands in the air.
"We can't have another young man's life taken amid murky circumstances. We want the truth to shine brightly," the family's lawyer, Ben Crump, said.
Amnesty International meanwhile welcomed the announcement but said "the department should also investigate any human rights abuses in connection with the policing of protests in Ferguson.