Michael Marine, the US ambassador to Hanoi, said: "We want this joint effort to come up with a good remediation plan in Danang.
"Then of course there is the process of finding the funding to carry forward these efforts."
Scientists have identified Danang and two other former US bases - Phu Cat in central Binh Dinh province and Bien Hoa in the southern province of Dong Nai - as "hot spots" that present a danger to people living near them.
Authorities in Danang and Bien Hoa have warned residents living near the two bases not to drink the water or grow vegetables in the soil near the facilities.
The chemicals were stored and spilled at all three wartime bases.
A study by Vietnamese and Canadian scientists of Hatfield environmental consultants in West Vancouver, British Columbia, measured dioxin levels in the soil near Bien Hoa that are hundreds of times higher than is acceptable in other countries.
An estimated 70 million litres of toxic chemicals were used from 1961 to 1971 by the US military and the South Vietnam government it supported.
The war ended on April 30, 1975 when the communist North took Saigon, re-named Ho Chi Minh City.
Dioxin is a small compound within the "agent orange" herbicide that the Americans used to defoliate the jungles where communist troops were based, but it is one of the most toxic compounds known, scientists say.
The $400,000 includes a state department grant and money and technical assistance to be provided by the US Environmental Protection Agency, the embassy said.
The rest of a roughly $1m fund comes from the Vietnam government, the New York-based Ford Foundation philanthropy and others.
Washington has ruled out paying compensation to Vietnam and the issue of lingering impacts of dioxin has been a thorn in otherwise friendly ties in recent years.
Washington's position is that there is no proven link between the spraying of dioxin and human health and disability.
Hanoi and Washington restored diplomatic relations in 1995 and have cemented their friendship on trade ties as Vietnam's market economy grows, but they have also cooperated in fighting HIV/AIDS and avian flu.