Officials said the Coast Guard worked with the U.S. Geological Survey to select a place where sinking the ship would do little environmental damage, CNN reported.
"The potential for a pollution incident is unknown at this time, but officials have limited concerns about any biological threats due to the length of time the vessel has been at sea," a Coast Guard statement said.
The Ryou-Un Maru, a trawler used for squid fishing, was anchored at Hachinohe in northern Honshu when the 9.0-magnitude earthquake struck the island March 11, 2011, followed by a devastating tsunami. That started the vessel on its last voyage with other debris.
A Canadian military plane spotted the ship last month off British Columbia. It drifted into U.S. waters Saturday.
The Ryou-Un Maru began taking on water after the Coast Guard set fire to it at about 1 p.m.