The "martyrdom" of George Floyd will spark changes in policing, says Speaker of the House Nancy Pelosi.
The bill would make it easier to prosecute police for misconduct, ban chokeholds, and addresses racism.
It comes as Minneapolis lawmakers vowed to disband the city's police force.
The death of George Floyd at the hands of a white officer there sparked national pressure for change.
However, it was unclear whether Republicans, who control the US Senate, would support the proposed Justice in Policing Act of 2020.
US President Donald Trump wrote on Twitter that "the Radical Left Democrats want to Defund and Abandon our Police. Sorry, I want LAW & ORDER!"
Mr Floyd's brother is expected to testify to the House of Representatives later this week in a hearing on police reform.
What does the bill say?
The Justice in Policing Act of 2020 was introduced on Monday by top Democratic lawmakers House Speaker Nancy Pelosi, Senate Minority Leader Chuck Schumer, black senators Kamala Harris and Cory Booker and members of the Congressional Black Caucus.
As she unveiled the bill, Mrs Pelosi read the names of black men and women who have died at the hands of police in recent years.
The bill forces federal police to use body and dashboard cameras, ban chokeholds, eliminate unannounced police raids known as "no-knock warrants", make it easier to hold police liable for civil rights violations and calls for federal funds to be withheld from local police forces who do not make similar reforms.
"The martyrdom of George Floyd gave the American experience a moment of national anguish, as we grieve for the black Americans killed by police brutality," Mrs Pelosi said.
"Today, this movement of national anguish is being transformed into a movement of national action".
The bill makes lynching a federal crime, limits the sale of military weapons to the police and gives the Department of Justice the authority to investigate state and local police for evidence of department-wide bias or misconduct.
It would also create a "national police misconduct registry" - a database of complaints against police.
Some Republican leaders have said they would consider the possibility of writing their own bill, with a hearing scheduled in the Senate Judiciary committee next week.
However, members of President Trump's party have been largely reticent on signalling support for legislation.
In a break with his party, Republican Senator Mitt Romney on Sunday tweeted pictures of himself marching towards the White House with Christian protesters, with the caption "Black Lives Matter."
What chance does the bill have?
The reform package, crafted by Democratic leaders in Congress, can be viewed as the "official" position of the party - at least for now. It is, in part, an effort to head off more drastic measures that some on the left, under the slogan "defund the police", are pushing.
If the Democrats can keep their liberal ranks in line, they should be able to get the reforms passed in the House of Representatives, where they have a majority. The outlook is less certain in the Republican-controlled Senate - particularly if Donald Trump sees political advantage in trying to paint Democratic proposals as a threat to "law and order".
While there is sure to be plenty of heated rhetoric from national politicians during a presidential election season, the real change may end up coming from local officials who are more directly accountable to the voters in municipalities that have seen the largest protests.
The call to disband the police in Minneapolis, while largely symbolic at this point, could indicate that sweeping changes are very real possibility - with or without federal guidance.
This could be the beginning of series of local experiments in policing reform that take very different forms in different parts of the US.
What is police defunding?
"Defund the police" was a rallying cry during the latest street protests, that at times spilt into violence and looting.
New York City Mayor Bill de Blasio had already said he would divert money from the city's police department to social services.
"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.
President Donald Trump has sought to cast his expected presidential challenger, Democrat Joe Biden, as a proponent of defunding police, but Mr Biden on Monday denied that he was a supporter.
"I don't support defunding the police," Mr Biden said in an interview with the BBC's US partner CBS.
"I support conditioning federal aid to police, based on whether or not they meet certain basic standards of decency and... are able to demonstrate they can protect the community and everybody in the community."
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.
What's the latest on the protests?
Demonstrators gathered again on Sunday in US cities including Washington DC, New York, and Los Angeles - where a local broadcaster estimated 20,000 people had rallied down Hollywood Boulevard.
The protests were mostly peaceful, and security measures across the US were lifted as unrest started to ease. However, Seattle Police Department said a man drove a car into a demonstration there on Sunday night, before shooting and wounding a 27-year-old bystander.
The UK also saw sizeable weekend protests in support of Black Lives Matter, with demonstrations in cities including London, Manchester, Cardiff, Leicester and Sheffield.
Protesters in London knelt for a minute's silence before chanting "no justice, no peace".
In Australia, tens of thousands joined anti-racism protests in Brisbane, Melbourne, Hobart, Adelaide and elsewhere, despite warnings from officials over the coronavirus.
US protests timeline
George Floyd dies after police arrest
George Floyd dies after being arrested by police outside a shop in Minneapolis, Minnesota. Footage shows a white officer, Derek Chauvin, kneeling on Mr Floyd’s neck for several minutes while he is pinned to the floor. Mr Floyd is heard repeatedly saying "I can’t 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 can’t breathe". Demonstrators again gather around the police station in Minneapolis where the officers involved in George Floyd’s 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".
CNN reporter arrested
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.
Sixth night of protests
Violence spreads across the US on the sixth night of protests. A total of at least five people are reported killed in protests from Indianapolis to Chicago. More than 75 cities have seen protests. At least 4,400 people have been arrested. Curfews are imposed across the US to try to stem the unrest.
Trump threatens military response
President Trump threatens to send in the military to quell growing civil unrest. He says if cities and states fail to control the protests and "defend their residents" he will deploy the army and "quickly solve the problem for them". Mr Trump poses in front of a damaged church shortly after police used tear gas to disperse peaceful protesters nearby.
Eighth night of protests
Tens of thousands of protesters again take to the streets. One of the biggest protests is in George Floyd’s hometown of Houston, Texas. Many defy curfews in several cities, but the demonstrations are largely peaceful.
Memorial service for George Floyd
A memorial service for George Floyd is held in Minneapolis. Those gathered in tribute stand in silence for eight minutes, 46 seconds, the amount of time Mr Floyd is alleged to have been on the ground under arrest. Hundreds attended the service, which heard a eulogy from civil rights activist Rev Al Sharpton.
As the US saw another weekend of protests, with tens of thousands marching in Washington DC, anti-racism demonstrations were held around the world.
In Australia, there were major protests in Sydney, Melbourne and Brisbane that focused on the treatment of indigenous Australians. There were also demonstrations in France, Germany, Spain and the UK. In Bristol, protesters tore down the statue of a 17th century slave trader and threw it into the harbour. BBC