US Army started to reduce the size of its army by 40,000 soldiers, which take place within the next two years, reported by the US media.
The cost-cutting exercise will also see an additional 17,000 civilian employees cut from the army.
The plan, which could be officially announced later this week, would see the US troop level drop to about 450,000 soldiers by the end of 2017.
The US Army had about 570,000 troops in 2012 at the height of the conflicts in Iraq and Afghanistan.
A drastic cut like this has long been on the table – in early 2014, the then Pentagon chief Chuck Hagel proposed trimming the active-duty Army to 450,000 personnel, after two costly foreign wars.
Nearly 10,000 US Army still remain in Afghanistan after plans for a gradual withdrawal were delayed until 2016.
In Iraq, there are about 3,500 military personnel helping Iraqi forces take on the Islamic State (IS) group.
There are also US troops being used to train Syrian rebels against IS, but it was revealed on Tuesday that only 60 Syrians are in training.
The planned army staffing levels would be the lowest since 1940, a year before the US entered World War Two, when it employed about 270,000 active-duty soldiers.
A year before the 11 September 2001 attacks, the level was about 480,000.
The army would have to cut a further 30,000 troops if automatic budget cuts known as sequestration come into effect in October, according to USA Today.