Mayor Jacob Frey earlier opposed the move, drawing boos from the crowds
Nine of the 13-member Minneapolis City Council in a veto-proof majority pledged on Sunday to dismantle the city's Police Department and replace it with a "new model of public safety."
The pledge is a significant move by the council in the wake of nationwide protests sparked by George Floyd's death last month, reports BBC.
Mayor Jacob Frey earlier opposed the move, drawing boos from the crowds.
Anti-racism rallies have been held after Floyd's death in police custody.
However, security measures across the country were lifted on Sunday as unrest started to ease.
Mr Floyd's funeral is scheduled for Tuesday in Houston, his home city before he moved to Minneapolis. The protests started after video emerged showing the 46-year-old African American pinned to the floor, with a white police officer kneeling on his neck for almost nine minutes.
Officer Derek Chauvin has been dismissed and charged with murder. Three other officers who were at the scene have also been sacked and charged with aiding and abetting.
What did Minneapolis City Council members say?
The nine councillors read a statement to hundreds of protesters on Sunday.
"We are here because here in Minneapolis and in cities across the United States it is clear that our existing system of policing and public safety is not keeping our communities safe," City Council President Lisa Bender was quoted as saying.
"Our efforts at incremental reform have failed. Period."
Ms Bender said details of the overhaul plan needed to be discussed further, adding that she would try to shift police funding towards community based strategies.
Meanwhile, councillor Alondra Cano tweeted that "a veto-proof majority" in the council had agreed that the city police department "is not reformable and that we're going to end the current policing system".
The process of setting up a new community-led body is likely to take several months, BBC North America correspondent Peter Bowes says.
The reform plan in Minneapolis also sets up what is likely to be a long and complicated debate over new ways of policing across the US.