Pentagon spokesman George Little announced the Christmas Day sale on Friday night. He said the U.S. and U.A.E. have a strong defence relationship and are both interested in "a secure and stable" Persian Gulf region.
The deal includes 96 missiles, along with supporting technology and training support that Little says will bolster the nation's missile defence capacity.
The deal includes a contract with Lockheed Martin to produce the highly sophisticated Terminal High Altitude Area Defence, or THAAD, weapon system for the U.A.E.
Tom McGrath, vice-president and program manager for Lockheed Martin's THAAD program in Dallas, said in a statement it was the first foreign military sale of the THAAD system.
THAAD interceptors are produced at Lockheed Martin's Pike County Facility in Troy, Alabama. The launchers and fire control units are produced at the company's Camden, Arkansas, facility.
Wary of Iran, the U.S. has been building up missile defences of its allies, including a $1.7 billion deal to upgrade Saudi Arabia's Patriot missiles and the sale of 209 Patriot missiles to Kuwait, valued at about $900 million.
On Thursday, the Obama administration announced the sale of $30 billion worth of F-15SA fighter jets to Saudi Arabia.
Under the fighter jet agreement, the U.S. will send Saudi Arabia 84 new fighter jets and upgrades for 70 more. Production of the aircraft, which will be manufactured by Boeing Co., will support 50,000 jobs and have a $3.5 billion annual economic impact in the U.S.
All the sales are part of a larger U.S. effort to realign its defence policies in the Persian Gulf to keep Iran in check.
The announcement came as U.S. officials weighed a fresh threat from Tehran, which warned this week it could disrupt traffic through the Strait of Hormuz, a vital Persian Gulf oil transport route, if Washington levies new sanctions targeting Iran's crude exports.
Under Secretary of State for Political Affairs Wendy Sherman, the third-ranking U.S. diplomat, will travel to Saudi Arabia and the U.A.E. next week to discuss "ongoing developments" in the region with senior officials of the two nations, the State Department said Friday.