The number of inmates in state and federal prisons dropped by 1.7 percent, from an estimated 1.59 million in 2011 to 1,57 million in 2012, The New York Times said Friday.
California, which has been released state prison inmates under court order due to overcrowding, accounted for 55 percent of the reduced U.S. prison population last year.
New York, Florida, Virginia and North Carolina, among other states, had inmate population decreases of more than 1,000 each.
Marc Mauer, executive director of the non-profit research group Sentencing Project, based in Washington, said it was significant the overall prison population had fallen in three consecutive years.
"A year or even two years is a blip and we shouldn't jump to conclusions, but three years starts to look like a trend," he said.
However, Mauer said the number of incarcerated people in the United States is still "dramatically higher" than in other countries, and the changes are "relatively modest compared to the scale of the problem."
Natasha Frost, associate dean of Northeastern University's school of criminology and criminal justice, said the report signals "the beginning of the end of mass incarceration."