The announcement was made by French President Emmanuel Macron, the host of this year's meeting of G7 leaders, after a G7 climate session. He said the fires were "two times the surface area of France" and were damaging the "most important lungs of the planet".
The agreement came as the leaders of Canada, France, Germany, Italy, Japan, the UK and the US met in Biarritz.
Macron said the funds would be made available "immediately" and added that France will "also offer concrete support with military in the region within the next few hours", the BBC reported.
The leaders also were studying the possibility of similar support in Africa, also suffering from fires in its rainforest, media reports said.
Macron said the US supported the initiative, although he acknowledged that US President Donald Trump had skipped Monday's working session on the environment because it clashed with other bilateral meetings he had on Monday.
A record number of fires are burning in Brazil, most of them in the Amazon, according to data provided by the country's National Institute for Space Research (Inpe).
Macron last week described the fires as an "international crisis" and pushed for them to be prioritised at the G7 summit which his country is hosting.
"Our house is burning. Literally. The Amazon rain forest - the lungs which produces 20 per cent of our planet's oxygen - is on fire. It is an international crisis. Members of the G7 Summit, let's discuss this emergency first order in two days," he had tweeted on Thursday.
Brazilian President Jair Bolsonaro had hit back at the French leader, saying that the idea of G7 discussing the issue was "reminiscent of colonial mindset inappropriate in the 21st century".
Critics accused Bolsonaro of "green lighting" the Amazon's destruction through anti-environmental rhetoric and a lack of action on deforestation violations.
After facing mounting pressure, the Brazilian President on August 23 authorized the country's military to help tackle the blazes.
Brazil's Defence Ministry said that 44,000 troops were available to help in the effort and officials said on Sunday that military intervention was authorized in seven states. Warplanes had also been drafted in to dump water on the areas affected.
Apart from the short-term emergency funding, Macron also announced a longer term common initiative for the Amazon that will be discussed at the UN General Assembly.
( With inputs from IANS )