He said the new price would be maintained for 60 days and adjusted monthly thereafter.
Striking truckers have blockaded main roads across the country and defied Mr Temer's threats to send the army in.
"We have done our part to ease the problems and suffering," Mr Temer said in a televised address.
It was not clear if striking drivers would accept his offer. Diesel prices in Brazil have nearly doubled since 2016.
The strike has brought much of Brazil to a standstill, with queues at petrol stations, airports running out of fuel and supermarket shelves empty.
On Sunday, security forces escorted fuel tankers to petrol stations and airports in at least eight states.
Last week, unions told drivers to clear the roads after President Temer threatened to send in the army. However, many drivers refused to leave their blockades until diesel prices came down.
More about: Brazil
