The US Embassy in Nepal, through the Ambassador's Fund for Cultural Preservation (AFCP), provided the amount to the Kathmandu Valley Preservation Trust (KVPT) for the restoration of the historic Char Narayan temple.
"Built in 1566, the temple demonstrates a significant and highly-developed expression of Newari architecture," according to a statement issued by the embassy.
"Our work through the Ambassador's Fund for Cultural Preservation serves as a symbol of the strong, vibrant partnership between our nations, as well as our respect for Nepal's diverse and rich heritage," said Ambassador Teplitz.
"As we celebrate the 70th year of diplomatic relations between our two countries, I am pleased to inaugurate the restoration work on Char Narayan as a tangible symbol of our mutual friendship," Teplitz said.
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Combined with other donors, the funding will support the seismic strengthening and restoration of the Malla-era temple belonging to Lord Vishnu.
The restoration work is expected to be completed within two years.
Nepal was hit by a massive 7.8 magnitude earthquake in April 2015 that left nearly 9,000 people dead and as many as 22,000 injured.