The work represents a major scientific leap forward, but experts said many hurdles remain before it can be shown to work in people, the Defense Advanced Research Projects Agency (DARPA) said.
The hope is that some day, a wireless, implantable device will bridge gaps in the injured brain and make it easier to remember basic events, places, and context -- known as declarative memories.
This kind of recall can be lost in traumatic brain injury, which has affected 270,00 US military service people since 2000 and touches 1.7 million US civilians each year.
"Those service members have paid the ultimate price in service of our nation, so it our great responsibility to try to come up with new and innovative -- not only scientific but medical -- approaches that can help repay some of that debt," said Sanchez.
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DARPA said it was carefully weighing the ethics of such experiments, and is consulting with a panel of neuroscience experts about potential pitfalls associated with the research.
The work is part of a four-year program that supports President Barack Obama's Brain Initiative, a USD 100 million effort.
The latest DARPA awards give up to $22.5 million to a team of scientists at the University of Pennsylvania, up to USD 15 million the University of California, Los Angeles, and USD 2.5 million to Lawrence Livermore National Laboratory.
Medtronic, the medical device technology company, was to contribute with a "cost-sharing effort," said Sanchez, but details on that were not immediately available.