The U.S. Fish and Wildlife Service announced its decision Tuesday. The area includes parts of Pima, Santa Cruz and Cochise counties in Arizona and Hidalgo County in New Mexico.
There hasn't been a jaguar sighting in New Mexico in eight years, and federal biologists are aware of only one male jaguar that frequents southern Arizona.
Still, the agency says setting aside land in the Southwest will contribute to the cat's recovery across its entire range, which stretches into South America.
Environmental groups filed a series of lawsuits seeking to protect the jaguar, but critics argue that critical habitat in the U.S. isn't essential to the cat's survival.
Jaguars were placed on the federal endangered species list in 1997.