In a video message to the World Health Assembly -- the WHO's decision-making body -- Kennedy said the UN agency was under undue influence from China, gender ideology and the pharmaceutical industry.
Upon returning to office in January, US President Donald Trump started the one-year process for leaving the WHO.
The United States has traditionally been the WHO's largest donor. Washington's departure, and its refusal to pay its membership fees for 2024 and 2025, has left it reeling financially.
"The WHO has become mired in bureaucratic bloat, entrenched paradigms, conflicts of interest and international power politics," Kennedy said in a message to the assembly.
"I urge the world's health ministers and the WHO to take our withdrawal from the organisation as a wake-up call.
"We've already been in contact with like-minded countries and we encourage others to consider joining us."
Kennedy, a noted vaccine sceptic, said the United States wanted to free international health cooperation "from the straight-jacket of political interference by corrupting influences".
"We don't have to suffer the limits of a moribund WHO. Let's create new institutions or revisit existing institutions that are lean, efficient, transparent and accountable," he said.
Kennedy also said that too often the WHO's priorities had "increasingly reflected the biases and the interests of corporate medicine".
"Too often it has allowed political agendas like pushing harmful gender ideology to hijack its core mission," he added.
- 'Undue influence' from China -
Kennedy said while the United States had been the WHO's top donor, China had "exerted undue influence" to serve its own interests.
He said the WHO had suppressed reports of human-to-human transmission of Covid, then "worked with China to promote the fiction that Covid originated from bats or pangolins rather than from Chinese government-sponsored research at a biolab in Wuhan".
Trump's administration has embraced the so-called lab leak theory.
Kennedy said global cooperation on health was still critically important to him and to Trump.
"But it isn't working very well under the WHO, as the failures of the Covid era demonstrate," he said.
Kennedy said the WHO Pandemic Agreement, adopted Tuesday by the assembly, "will lock in all of the dysfunctions of the WHO pandemic response. We're not going to participate in that. We need to reboot the whole system."
A March 2021 WHO-Chinese joint report into Covid's origins said the most likely hypothesis was that the virus jumped from bats to humans via an intermediate animal. But little further progress has been made.
WHO chief Tedros Adhanom Ghebreyesus has long said all theories remain on the table as to how the Covid-19 pandemic began.
In his speech to the assembly on Tuesday, Tedros said: "The pandemic has ended, but we still don't know how it started."
"Understanding how it did remains important, both as a scientific imperative and as a moral imperative", for the sake of the millions killed.
Chinese Vice Premier Liu Guozhong told the assembly that Beijing had been "responsible and constructive on the matters of Covid" and "any attempts to smear China... will prove futile".
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