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The research will focus on improving the efficiency of usage and extraction, while also seeking to reduce reliance on REEs by discovering substitute materials.
"This fundamental research is aimed at both improving current availability and supply of these elements and finding promising alternative materials," said Dr Chris Fall, director of DOE's Office of Science.
Five DOE national laboratory teams, chosen by competitive peer review, will lead the research.
The DOE said the effort is closely aligned with a Federal initiative to "advance transformational research, development, and deployment across the critical mineral supply chain".
"Increasing the availability of critical materials and discovering alternatives for them is essential to America's energy security and will also open new avenues for commercial applications," added Fall.