The National Highway Traffic Safety Administration (NHTSA) said it received 154 complaints involving Ford Explorers with model years between 2011 and 2015.
One driver said the odour caused a low-speed crash. No injuries were reported.
The NHTSA and Ford Motor Co. declined to say how many vehicles are being investigated. Ford sold more than 950,000 of its 2011 to 2015 Explorers, according to Autodata Corp.
Exhaust gas was smelled when the SUVs were in full throttle, like when climbing steep roads or merging on to freeway ramps. The odour was also detected when the air conditioner was in recirculation mode, the NHTSA said.
Some owners said that two recommended fixes from Ford in 2012 and 2014 failed to fix the issue.
Ford, based in Dearborn, Mich., said Tuesday that it is co-operating with the investigation.