The deal includes 14 F-35 stealth fighters made by the US company, Lockheed Martin, at a cost of about $110 million each, Israeli officials announced on Sunday.
Other technological and training elements were also included in the military package.
The occupying regime is expected to receive the fighter jets by the end of next year.
The United States provides Israel with some $8.5 million in military aid per day, adding up to over $3 billion annually.
In November, the Department of Defense announced plans to arm Israel with 3,000 smart bombs as part of Washington’s military aid to Tel Aviv.
In December, American lawmakers passed a bill to deepen Washington's bonds with Tel Aviv, making Israel a "major strategic partner" of the United States.
The US House of Representatives approved the US-Israel Strategic Partnership Act of 2014, which reflects "the sense of Congress that Israel is a major strategic partner of the United States," and declares Washington's "unwavering support" for the regime.
The US military aid to the regime has prompted several demonstrations across the country against such deals.
American protesters argue that the US taxpayer money is used for more Zionist aggression against Palestinians.