The US president said on Monday it would bolster national security and the economy with the creation of jobs.
"It is not enough to merely have an American presence in space. We must have American dominance in space," Mr Trump said at the White House.
He also promised that the US would "return Americans to the Moon" and would eventually send people to Mars.
"I'm hereby directing the Department of Defense and Pentagon to immediately begin the process necessary to establish a space force as the sixth branch of the armed forces," Mr Trump announced, moments after he discussed US and German approaches to immigration .