The companies promised to launch the fund by 1 September, but did not say how much industry will pay into it.
The chairman of Deutsche Bank, Rolf Breuer, an architect of the fund, called a joint declaration establishing the fund by 12 German companies and the government a "milestone".
Chancellor Gerhard Schroder said: "This paper shows that German business can deal responsibly with its history."
The pledge was German industry's first formal step toward creating the compensation fund, a response to lawsuits against German companies in the United States by former slave workers.
Mr Schroder's chief of staff, Bodo Homboch, said 200,000 to 300,000 former slave labourers would be eligible for payments.
Those firms setting up the foundation for "remembrance, responsibility and the future" include car makers Volkswagen, DaimlerChrysler and BMW, chemical and pharmaceutical companies Bayer, Hoechst and BASF, Deutsche and Dresdner banks, the industrial firms Siemens, and the Allianz insurance company.
A US lawyer pressing victims' claims, Ed Fagan, called the announcement "a step in the right direction" but said the small number of companies backing the effort was not yet enough. At least 263 firms used slave labour, he said. (AP)Reuse content