Three airports were closed and airspace was shut down off the South Carolina coast as US military planes targeted the object over the Atlantic Ocean.
According to the AP news agency, footage showed the balloon falling to the sea after a small explosion.
US President Joe Biden faced intense pressure to shoot it down since it first appeared across the US last week.
Tracking website Flightradar24 showed US Air Force and Coastguard aircraft operating in the skies between Wilmington, North Carolina, and Myrtle Beach.
The coast guard had also advised mariners to leave the area due to military operations "that present a significant hazard," the Associated Press reports.
The news agency, quoting unnamed officials, said President Biden had given the go ahead to bring the balloon down over the Atlantic Ocean, where debris can be retrieved.
The balloon's arrival over the US comes amid fraying tensions between Washington and Beijing, with Secretary of State Antony Blinken calling off a trip to Beijing over the matter.
Mr Blinken said the "surveillance" balloon's presence was "an irresponsible act". However, China - which says it is a weather ship blown astray - has urged "cool-headed" handling of the dispute.
In another development, the US reported a second Chinese balloon floating over Latin America on Friday.
China, which has expressed regret over the incident, said on Saturday it had "never violated the territory and airspace of any sovereign country".
In a statement, its foreign ministry played down the cancellation of Mr Blinken's visit and said neither side had formally announced such a plan.
It added that Beijing "would not accept any groundless conjecture or hype" and accused "some politicians and media in the United States" of using the incident "as a pretext to attack and smear China."
According to US officials, the balloon floated over Alaska and Canada before appearing over the US state of Montana, which is home to a number of sensitive nuclear missile sites.
The incident angered top US officials, with Mr Blinken saying he had told Beijing the balloon's presence was "a clear violation of US sovereignty and international law" and "an irresponsible act" on the eve of his visit to China.
America's top diplomat had been set to visit Beijing from 5 to 6 February to hold talks on a wide range of issues, including security, Taiwan and Covid-19. It would have been the first high-level US-China meeting there in years.
But plans faltered after US defence officials announced they were tracking a giant surveillance balloon over the US on Thursday.
While the Pentagon said the balloon had been "travelling at an altitude well above commercial air traffic" and did "not present a military or physical threat to people on the ground", its presence has sparked outrage.
On Friday, China finally acknowledged the balloon was its property, saying it was a civilian airship used for meteorological research, which deviated from its route because of bad weather.
And late on Friday, the Pentagon said a second Chinese spy balloon had been spotted - this time over Latin America with reported sightings over Costa Rica and Venezuela.
China has so far made no public comments on the reported second balloon.
