Washington has put $32 million into the scheme centred on a former US military base in Danang, central Vietnam, where the deadly dioxin was stored.
It will see Agent Orange pollution removed from 29 hectares of land.
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US embassy representative Virginia Palmer described the Danand project as "a sign of the hopeful future we are building together."
It will see the Vietnamese government and Washington co-operate to clean up the US mess in an area where Agent Orange deposits are 300-400 times higher than international limits.
Nearly five million Vietnamese were exposed during the conflict.
It is estimated that around half a million children have been born with deformities including missing limbs and organs.
US courts have rejected out of hand any attempt by its Vietnamese victims to claim compensation for their suffering.
An estimated 12 per cent of the country was drenched with the poison during the conflict, but judges have ruled consistently that its use was aimed at plants rather than humans and so no compensation is due from main manufacturers Dow Chemical and Monsanto.
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