Elaborating on an announcement on Friday by the presidents of the two countries, the department said Jakarta would cover an estimated up to $750 million to refurbish the late-model fighters and overhaul their engines.
The F-16 C/D models are decommissioned and no longer part of the U.S. Air Force inventory. Retooled and upgraded, they will contribute to Indonesia's "interoperability" with the United States, Navy Commander Leslie Hull-Ryde, a Defense Department spokeswoman, added in an email to Reuters.
Interoperability is the extent to which military forces are able to communicate with each other and share information to achieve a common goal.
"Indonesia is an important U.S. partner and a leader in Southeast Asia," Hull-Ryde said. "The Department of Defense is working to support the Indonesian military in their efforts to modernize the force."
Developing ties with Indonesia, the largest country in Southeast Asia and the world's most populous Muslim-majority nation, is a priority for the Obama administration as it seeks to shape the economies and security of the region.
With arms transfers come training, closer military establishments and other ties.
The United States granted Indonesia, "without cost," the Lockheed Martin Corp aircraft and United Technologies Corp Pratt & Whitney engines, Hull-Ryde said, and the fix-up bill "is not expected to exceed $750 million."