The singer made the announcement while on stage in Sydney, telling the audience they should be “in awe of the work that the firefighters are doing”.
He added: “This is a magnificent country that I’ve been coming to since 1971.
“I love it here so much. To see what is happening here breaks my heart and so we have to come together and we have to fight, and this is my bit towards it.
“I love Australia so much and to those that have lost their homes, God bless, I hope that your lives will be repaired very soon.”
It came as the smoke from the fires – which previously covered an area larger than Europe – reached as far as Argentina.
Animals have had their habitats destroyed “on a biblical scale”, Sir Elton told the audience at the Qudos Bank Arena.
He added: “Therefore tonight I will be pledging one million dollars to support the bushfire relief fund.”
His announcement was met with huge cheers from the crowd.
Sir Elton did not say whether his donation was in Australian or US dollars, which would be worth about £524,000 and £762,000 respectively.
Australian actor Chris Hemsworth also pledged the same sum towards the relief fund, while fellow Australian Kylie Minogue pledged $500,000 to help with the response to the fire.
Actress Phoebe Waller-Bridge revealed at the Golden Globes that she would be auctioning off the suit she wore to the award ceremony and donating the proceeds towards the response to the fires.
Singer Pink has also donated $500,000 dollars to the cause, while pop star Rita Ora was among famous faces urging the public to donate.
The fires, which first broke out in September, have so far claimed 24 lives and destroyed more than 1,500 homes, ravaging more than four million hectares of land.
A mass cull of more than 10,000 camels by professional shooters in helicopters will begin on Wednesday to prevent the animals from drinking too much water in drought-afflicted South Australia.
The order came from Aboriginal leaders in the Anangu Pitjantjatjara Yankunytjatjara (APY) lands where locals have complained about the animals entering communities and wreaking havoc as they look for any available water source, including taps and tanks.
The animals are also being culled over concerns about greenhouse gas emissions, as they emit methane equivalent to one ton of carbon dioxide per year, national broadsheet The Australian reported.
Other wildlife has been hit hard by the fires, with some female bats abandoning their young because they cannot feed them, and images of burnt koalas and kangaroos drawing sympathy from around the world.
Smoke from the wildfires has drifted across the Pacific to South America, where skies over central Chile have gone grey and the sunset in Argentina’s capital, Buenos Aires, has turned red, according to the UN World Meteorological Organisation.
Additional reporting by Press Association
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