The US announced the sale ahead of the meeting between Secretary of State John Kerry and Iranian Foreign Minister Javad Zarif on Friday.
According to the State Department, Washington is set to pay $8.6 million (7.66 million euros) for 32 tons of heavy water, which contains elevated levels of a special hydrogen isotope. The fluid can be used in plutonium processing, but scientists also use it for research and medical applications.
"This transaction provides US industry with a critical product, while also enabling Iran to sell some of its excess heavy water," State Department spokesman John Kirby said.
After international representatives sign off on the deal in Vienna, the water would be transported to a laboratory in Tennessee and then resold on the commercial market.
Tehran cut off
Kirby confirmed that the buy was meant to help Iran meet its obligations under last year's nuclear accord, ensuring the material would not be used to develop a nuclear weapon.
Under the accord's terms, Tehran is allowed to use heavy water in its Arak nuclear reactor, but needs to sell of any excess supply.
"Our purchase of the heavy water means that it will instead be used for critically important research and non-nuclear industrial requirements," spokesman Kirby said.
Although Washington has started rolling back a number of sanctions since the nuclear deal, Iran is still under restrictions for its missile program and the alleged support to terror groups.
Among other measures, Iran is barred from accessing the US financial system. The restrictions have prevented Iran from accessing billions in funds, as even European and Asian banks hesitate to unfreeze the money and possibly face fines in the US.
Subsidizing sponsors of 'terrorism'
The news of the sale prompted heavy criticism from Republican lawmakers in the US, with the chairman of the House Foreign Affairs committee accusing the Obama administration of "handing Iran's radical regime more cash."
"Far from curbing its nuclear program, this encourages Iran to produce more heavy water to sell - with a stamp of US approval - on the international market," representative Ed Royce said.
House Speaker Paul Ryan also claimed that the move would "directly subsidize Iran's nuclear program."
Ryan described the purchase as "another unprecedented concession to the world's leading state-sponsor of terrorism."