Soil and sediment containing the hazardous chemical will be removed and treated, Vietnam.net reported.
The U.S. and Vietnam are cooperating in the project, which began Thursday, to remove about 786,000 square feet of dirt contaminated with dioxin, a major component of the compound. The soil will be heated to a high temperature to destroy the toxin.
The treatment will make the soil safe for industrial and commercial use, meeting standards of both the U.S. and Vietnam, officials said.
The project is scheduled to be completed in 2016.
"Today's milestone is both an acknowledgement of our painful past as well as -- in the words of Secretary [Hillary] Clinton during her October 2010 visit to Vietnam -- "a sign of the more hopeful future we are building together," said David Shear, the U.S. ambassador to Vietnam.
USAID is starting a three-year, $9 million program later this year to provide medical care, rehabilitation, education and job training to Vietnamese with disabilities. The U.S. Centers for Disease Control and Prevention will work with USAID to help prevent disabilities and birth defects.