A majority of Minneapolis City Council has pledged to dismantle the local police department, a significant move amid nationwide protests sparked by George Floyd's death last month.
Nine of the 13 councillors said a "new model of public safety" would be created in a city where law enforcement has been accused of racism.
Mayor Jacob Frey earlier opposed the move, drawing boos from the crowds.
Activists, who for years have defended such a move, called it a turning point.
Mr Floyd's death in police custody triggered mass protests against racism and police brutality. Security measures across the country were lifted on Sunday as unrest started to ease.
Thousands of people are expected to gather on Monday for a public viewing of Mr Floyd's body in Houston, his home city in Texas before he moved to Minneapolis, Minnesota. A private funeral will be held on Tuesday.
A video of Mr Floyd, a 46-year-old African American, pinned to the floor with a white police officer kneeling on his neck for almost nine minutes sparked worldwide outrage.
Officer Derek Chauvin has been dismissed and charged with second-degree murder. He will make his first court appearance later on Monday.
Three other officers who were at the scene have also been sacked and charged with aiding and abetting.
What did Minneapolis City Council members say?
The nine councillors read a statement to hundreds of protesters on Sunday.
"We are here because here in Minneapolis and in cities across the United States it is clear that our existing system of policing and public safety is not keeping our communities safe," City Council President Lisa Bender was quoted as saying.
"Our efforts at incremental reform have failed. Period."
Ms Bender said details of the overhaul plan needed to be discussed further, adding that she would try to shift police funding towards community based strategies.
Meanwhile, councillor Alondra Cano tweeted that "a veto-proof majority" in the council had agreed that the city police department was "not reformable and that we're going to end the current policing system".
Last week, Minnesota launched a civil rights investigation of the Minneapolis Police Department, with Governor Tim Walz saying he wanted to root out "systemic racism that is generations deep".
The city council later voted for a number of policing changes, including the ban on chokeholds and neck restraints by police officers.
What has the reaction been?
The reform plan in Minneapolis sets up what is likely to be a long and complicated debate over new ways of policing across the US. But the process of setting up a new system will probably take months, and is not guaranteed because of the mayor's opposition.
Reacting to the announcement, Kandace Montgomery, the director of the Minnesota-based campaign group Black Vision, said: "It shouldn't have taken so much death to get us here. We're safer without armed, unaccountable patrols supported by the state hunting black people."
On Monday, Democrats in Congress are expected to present sweeping legislation on police reform.
More on George Floyd's death
What's happening elsewhere?
New York City Mayor Bill de Blasio had already said he would divert money from the city's police department to social services.
"Defund the police" was a rallying cry during the latest street protests, that occasionally spilled into violence and looting.
"Defunding" advocates have for years been condemning what they describe as the aggressive militarised policing in the US.
They argue that police departments' budgets should be slashed and funds diverted to social programmes to avoid unnecessary confrontation and heal the racial divide.
Entire city police departments have been disbanded before in the country: in Compton, California, in 2000, and 12 years later in Camden, New Jersey. In both cases they were replaced with bigger new forces that covered local counties.
US protests timeline
25 May 2020
George Floyd dies after being arrested by police outside a shop in Minneapolis, Minnesota. Footage shows a white officer, Derek Chauvin, kneeling on Mr Floyds neck for several minutes while he is pinned to the floor. Mr Floyd is heard repeatedly saying "I cant breathe". He is pronounced dead later in hospital.
Four officers involved in the arrest of George Floyd are fired. Protests begin as the video of the arrest is shared widely on social media. Hundreds of demonstrators take to the streets of Minneapolis and vandalise police cars and the police station with graffiti.
Protests spread to other cities including Memphis and Los Angeles. In some places, like Portland, Oregon, protesters lie in the road, chanting "I cant breathe". Demonstrators again gather around the police station in Minneapolis where the officers involved in George Floyds arrest were based and set fire to it. The building is evacuated and police retreat.
President Trump blames the violence on a lack of leadership in Minneapolis and threatens to send in the National Guard in a tweet. He follows it up in a second tweet with a warning "when the looting starts, the shooting starts". The second tweet is hidden by Twitter for "glorifying violence".
A CNN reporter, Omar Jimenez, is arrested while covering the Minneapolis protest. Mr Jimenez was reporting live when police officers handcuffed him. A few minutes later several of his colleagues are also arrested. They are all later released once they are confirmed to be members of the media.
Derek Chauvin charged with murder
Former Minneapolis police officer Derek Chauvin, 44, is charged with murder and manslaughter. The charges carry a combined maximum 35-year sentence.