The pledge includes $5.8bn in aid and investment for strengthening government and economic development in Central America, and another $4.8bn in development aid for southern Mexico.
The US aid aims to promote better security conditions and job opportunities to allow Central Americans and Mexicans to remain in their countries and not have to emigrate.
It comes after weeks of hardline rhetoric from Donald Trump about the caravans originally full of thousands of Central American refugees and migrants that have ended up at the US-Mexico border.
The plan was announced in a joint US-Mexican statement released by the State Department and read aloud by Mexican Foreign Relations Secretary Marcelo Ebrard in the Mexican capital.
“In sum I think this is good news, very good news for Mexico,” Mr Ebrard said.
Newly inaugurated Mexican President Andres Manuel Lopez Obrador waxed poetic about the plan to provide jobs in his country, saying he hoped less Mexicans would eventually seek to emigrate to the US.
“I have a dream that I want to see become a reality ... that nobody will want to go work in the United States anymore,” Mr Obrador said at a morning news conference before the announcement.
The combination of public and private investment for the stay-at-home effort doesn't require congressional approval, unlike Mr Trump's signature project to stem illegal immigration — a large wall spanning the entirety of the US-Mexico border.
The US State Department issued a simultaneous statement Tuesday, saying “The United States is committing $5.8bn through public and private investment to promote institutional reforms and development in the Northern Triangle,” a term that refers to Honduras, Guatemala and El Salvador.
Mr Obrador's administration has said it is also interested in agricultural, forestry and tourism projects in southern Mexico.
The US has already said it will contribute to those efforts.
The US Overseas Private Investment Corporation “is prepared to invest and mobilise $2bn in additional funds for projects in southern Mexico that are viable and attract private sector investment,” according to the statement. “This amount is in addition to the $2.8bn in projects for Mexico through OPIC's current investment pipeline.”
Mr Edbard added: “The commitments established here signify more than doubling foreign investment in southern Mexico starting in 2019.”
Southern states like Chiapas and Oaxaca are home to many of Mexico's poorest communities.
Mr Obrador, who took office in the beginning of December, has sought to make development in that region a priority, including plans for a “Mayan train” stretching from touristy parts of the Yucatan Peninsula down to Chiapas.
It was not immediately clear if Mexico would give anything in return for the massive investment. A planned announcement about Mexico's migration policy was postponed until Wednesday.
The US has reportedly wanted Mexico to allow migrants seeking asylum in the United States to remain in Mexico while their applications are processed.
Mr Edbard had previously suggested about $25 billion in US investment would be an appropriate figure for what Mexicans and Central Americans have dubbed “The Alliance for Prosperity” in the region.
Additional reporting by AP
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