Gay troops could begin serving openly by the summer, once training has been completed and the White House agrees the policy will not hinder fighting.
But the Pentagon warned that troops’ same-sex spouses would not be eligible for military benefits.
Last month the US Congress overturned the “don’t ask, don’t tell” policy.
“It remains the policy of the Department of Defense that sexual orientation is a personal and private matter, to treat all members with dignity and respect, and to ensure the maintenance of good order and discipline,” Under Secretary of Defense Clifford Stanley wrote to military leaders.
“A clear focus on leadership, professionalism and respect will enable any change in policy to be executed with minimum disruption to the force.”
The new training programme is expected to begin in February. Among other elements, commanders will be trained to watch for signs of unease among the troops, and troops will be instructed on the new policy.
Benefits programmes will not change, the Pentagon warned. Because US federal law does not recognise same-sex marriage, military benefits such as medical care, travel and housing allowances and others will not be extended to same-sex couples.
When the training programme is complete, the ban will officially end 60 days after President Barack Obama certifies that the change in policy will not negatively affect military readiness.
Mr Obama signed the law allowing gay people serving in the military to be open about their sexuality last month.
“Starting this year, no American will be forbidden from serving the country they love because of who they love,” he said in his State of the Union speech earlier this week.
“It is time to leave behind the divisive battles of the past. It is time to move forward as one nation.”
The “don’t ask, don’t tell” policy, under which the military was forbidden to question troops about their sexual orientation but troops could be expelled if their orientation were discovered, was enacted in 1993 under former President Bill Clinton.
More than 13,000 service members have been dismissed under the policy. – Bbcnews