Captain Rogelio Maynulet, 30, from Chicago, has been charged with assault with intent to commit murder and with dereliction of duty - charges that carry a maximum combined sentence of 20 years. He has not yet entered a plea.
His court martial is expected in Weisbaden, Germany on Monday.
The charges stem from a 21 May 2004 incident when Maynulet was leading his 1st Armoured Division tank company on patrol near the city of Kufa, south of Baghdad, where heavy fighting had been reported.
They encountered a car thought to be carrying a driver for Shia leader Muqtada al-Sadr and a militiaman. US soldiers chased the vehicle and fired at it, wounding both the driver and passenger.
When a medic pulled the driver out of the car, it was clear he had suffered critical injuries, with part of his skull blown away, according to testimony heard during Maynulet's Article 32 hearing - the military's equivalent of a civilian grand jury investigation.
Maynulet's fellow officers said at the Article 32 hearing that he shot the man in an act of compassion to end his suffering.
It was not immediately clear whether footage of the incident taken by a US drone surveillance aircraft would be declassified for public view at the trial.