The Pentagon's Defense Security Cooperation Agency (DSCA), which oversees major arms sales, said the deal is vital to U.S. national security interests to assist Israel as it develops and maintains "a strong and ready self-defense capability."
Israel needs the aircraft to enhance its air-to-air and air-to-ground capability.
Lockheed Martin said it welcomes the decision. "As the first potential foreign military sale of the F-35, this would be an important first step in expanding interest in the Joint Strike Fighter beyond the U.S. government and eight international F-35 partner nations," said Lockheed spokesman Tom Jurkowsky.
Earlier the Pentagon approved up to $330 million in three separate arms deals for Israel.
The U.S. government said it approved the sale to Israel of 25 F-35 Joint Strike Fighter aircraft built by Lockheed Martin with an option for 50 more in coming years -- a deal valued at up to $15.2 billion.