The organisation's Secretary General Saeb Erekat said it had officially informed the US that if it indeed shuttered the office, "we would put on hold all our communications with this American administration."
The PLO, which the international community sees as representing all Palestinians, must have its permission to operate its premises in the American capital renewed every six months.
The US State Department said it had refused to renew it in response to the Palestinians' initiative to take the issue of Israeli settlements to the International Criminal Court.
The decision could be reversed within 90 days if "the Palestinians have entered into direct, meaningful negotiations with Israel".
In a video on Twitter, Erekat called the decision "very unfortunate and unacceptable", blaming it on pressure exerted by the government of Israeli Prime Minister Benjamin Netanyahu.
"At a time when we are trying to cooperate to achieve the ultimate deal they take such steps which will undermine the whole peace process," Erekat said.
