Contamination from Agent Orange at a former wartime US base in Vietnam will go through a massive clean-up process middle of next year, announced the US embassy.
A memorandum signed between the two sides "confirms the mutual desire of both governments to cooperate in hopes that cleanup can begin in July 2011 and be completed in October 2013," the statement said.
The agreement covers contamination at the Danang airport in central Vietnam.
During the Vietnam War US aircraft flying from bases including Danang sprayed Agent Orange and other herbicides to strip trees of foliage, in a bid to deprive communist forces of cover and food.
The herbicides contained potentially cancer-causing dioxin.
In preparation for the cleanup, the US awarded a contract late last year for building a secure landfill site to hold contaminated soil and sediment at the airport, where the US is focusing its help at Vietnam's request.
US ambassador Michael Michalak told the signing ceremony on Thursday that Washington has set aside almost 17 million dollars this year for the Danang dioxin cleanup, which will cost a total of 34 million dollars.
"The two governments are now jointly preparing for the design, procurement and implementation of the project," he said.
Experts have identified two other former US air bases as "hot spots" of dioxin contamination.
The UN this year announced a five-million-dollar project to reduce contamination at the Bien Hoa airport hot spot near Ho Chi Minh City.
A Vietnamese doctor testified before the US Congress this year that more than three million Vietnamese have suffered the effects of wartime herbicides.
Vietnam and the US normalised relations 15 years ago.