Maj. Gen. Rick Lynch, commander of U.S. troops south of Baghdad, said the offer was made on 50,000 leaflets distributed in the area where the troops disappeared after a pre-dawn ambush Saturday in which four American troops and an Iraq soldier were killed.
Word of the reward was also broadcast over loudspeakers as part of a massive search involving 4,000 U.S. troops and 2,000 Iraqis, Lynch told The Associated Press.
He said the reward was one of several measures being taken as part of the search. Troops have pursued 143 intelligence leads, have staged eight air assault operations, and established blocking positions to keep those behind the abductions from fleeing with their captives.
"We've done so much as to drain canals after a report that the bodies were in a canal," he said. "So we're leaving no stone unturned."
The U.S. command has said the searchers were trying to isolate areas where they suspect the captives may have been taken after the attack, which occurred near Mahmoudiya, 20 miles south of Baghdad.
An al Qaeda front group — the Islamic State of Iraq — has said it captured the soldiers and warned the Americans in a Web statement on Monday to call off the hunt "if you want their safety."
The soldiers attacked Saturday were assigned to a small patrol base set up as part of the new U.S. strategy to move troops from large, heavily defended garrisons to live and work among the people.
Critics of the strategy had warned that such small outposts are more vulnerable to attack. Last month, nine American soldiers were killed when a suicide bomber detonated his explosives-laden vehicle near a small patrol base northeast of Baghdad.
Lynch said he was optimistic that the three soldiers would be found alive and the search remained focused on the area where they went missing.
"We're pursuing all intelligence," he said. "Some of those leads tell us that the soldiers have been taken out of the area but the majority tell us that they're still in the area."