The Pentagon's Defense Advanced Research Projects Agency wants the vehicle to be able to carry four people and travel 280 miles by air and land, The Boston Globe reported.
Part of the nearly $65 million in development money is going to Terrafugia, the Woburn, Mass., company that has developed a flying automobile that could go on the market by the end of next year.
The military vehicle, known as the Transformer, or TX, would have what project officials called "unprecedented capability to avoid traditional and asymmetrical threats while avoiding road obstructions."
While on the ground, the vehicle would function like a four-wheel-drive Humvee, the report said.
The drivable aircraft could be used for medical evacuation, avoiding improvised explosive devices, and to take Special Forces into action. It would also have an automatic pilot so non-pilots could fly it.
"Our strong team of Terrafugia engineers with recent experience designing and building a dual purpose vehicle will bring a unique perspective to the TX program," company chief Carl Dietrich said.
Terrafugia said it is the largest subcontractor to one of the two winning teams that was selected for the project by DARPA. Officials want a prototype within five years.