The agency cited "acute fatalities that have resulted from exposure to the chemical" in its reasoning and said methylene chloride poses "unreasonable health risks" to users.
At least 64 deaths have been linked to exposure, according to Safer Chemicals, Healthy Families, which has advocated against the chemical.
Methylene chloride exposure can cause build-up of fluid in a person's lungs, headaches, dizziness and difficulty walking, according to the Centers for Disease Control and Prevention. The CDC notes that after serious or "repeated exposures," the chemical can cause brain damage and at high levels of exposure, it can cause "fainting and even death."
The ban does not restrict industrial or commercial uses of the chemical, which is also used in plastics processing. But the EPA said it would take public comments on whether a training and certification program could be developed for commercial users.
If "we determine that the risks to users of this chemical for paint and coating removal in the workplace cannot be managed, then EPA would make a legal finding again under the statute and make the appropriate risk management decision which could be banning it or restricting its use in some way," Alexandra Dunn, the assistant administrator for chemical safety, told reporters on a conference call.
The ban is expected to take effect in mid-to-late November.
Major retailers, including Home Depot and Lowe's, say they have already removed products containing methylene chloride from their shelves.
The American Chemistry Council said it supported the EPA's ban and consideration of "a federally-enforceable training, certification and limited access program."
But the Environmental Working Group criticized the administration for making "a significant retreat" and not extending the ban to commercial uses. EWG attorney Melanie Benesh accused the administration of "catering to the wishes of the chemical industry."