The money was seized by the US Customs during a money laundering operation organised by Texan drugs smuggler, Victor Stadter.
The Jersey-based trust company which Stadter tried to use to launder the money informed the local police who then initiated an investigation that led to $2.1m being seized when it was transferred from the Channel Islands to California.
US ambassador William J Crowe, who will be travelling to Jersey in the New Year to present the award personally, paid tribute to the assistance given by the island.
"Co-operation between jurisdictions, particularly internationally, is a critical element in the fight against international drug trafficking and money laundering," said Ambassador Crowe.
"The superb assistance given by the Jersey authorities led directly to this successful outcome and demonstrates co-operation at its best."
The cash, which represents about 5 per cent of the force's annual budget, will be used to help combat drug trafficking and to promote anti-drug health and education programmes on the island.
Under Jersey law, any finance company dealing with money believed to be connected with drug trafficking or terrorism must inform the police. Around 300 such reports are made each year but according to Det Insp Peter Hopper, head of the force's commercial branch and financial investigations unit, only 5 per cent lead to police investigations.
The $1m award is the second substantial sum the island has received following the seizure of drugs money. Last year, it retained pounds 266,000 following a joint investigation with the US Drug Enforcement Administration (DEA), an inquiry that was begun when a man arrived at Jersey Airport with a suitcase full of gold bars.
In this latest attempt to use the island for money laundering, Stadter and his partner, fellow American Barry Rosen, set up an account in Jersey claiming that 300 fairground sites they owned produced an income of at least $100,000 a month. Over the next 6 months, more than $2m was transferred to the account, but the finance house became suspicious when Stadter moved the money into another account belonging to a Mexican woman, Marina Anaya-Herrera.
When she attempted to transfer $2.1m to California, it was seized by the US Customs and in a subsequent San Francisco court action, a jury unanimously decided that the money was the proceeds of drug trafficking, discounting her claim that she had inherited it from her father.
The court heard that Stadter had a long history of involvement in drug smuggling and money laundering and that he had used at least 12 aliases.
Mentioned in more than 70 investigations by the DEA, he is also believed to have arranged the daring helicopter escape by an inmate from the Santa Marta prison in Mexico, which formed the basis of the Charles Bronson film Breakout.