The decision comes after several days of negative attention following news reports about a Soldier who was charged $100 for his extra bag by American and a call by the Veterans of Foreign Wars for carriers to waive such fees.
American, and many of its peer airlines, already waives fees for a military passenger's first and second checked bag.
The VFW argued that although the fees were an industry norm and could be reimbursed, the process represented an extra burden for deployed troops.
"$100 is a large out-of-pocket burden for a young person who doesn't make much money," said VFW spokesman Joe Davis.
Davis said he was pleased that American agreed to the waiver. "We hope the other major airlines follow suit soon," he said.
Dallas-based Southwest Airlines Co. issued a statement Wednesday reiterating that it had long made exceptions for members of the military and formalized its policy doing so in January.
Tom Del Valle, American's senior vice president of airport services, said the carrier had always understood that Soldiers were reimbursed for such fees and didn't realize the burden that process could represent.
"We appreciate and marvel at the bravery and sacrifice our military personnel exhibit daily," Del Valle said. "Anything we can do to support them and honor them is a top priority for American Airlines."