The department awarded US$2.9mln for the next phase of work to develop a handheld Genedrive test for biohazard identification.
Last August, Epistem announced the first $2.4mln phase of the $7.8mln programme and this second phase was triggered by successful progress to date and is expected to be largely undertaken during the 2016/17 year, the company said.
David Budd, Epistem's chief executive, said: "Today's announcement is a recognition of our team's expertise in developing new assays and marks a further important validation of Genedrive's potential as a highly versatile molecular diagnostic system which can be used outside a central lab setting.
"The US Department of Defense programme funding increases our overall development capability and our ability to develop Genedrive to realise its full potential."
Shares were unchanged at 95p each.