In a 2008 battle in Paktia province, Staff Sgt Leroy Petry of New Mexico was shot in both legs and lost a hand while trying to toss away an enemy grenade.
The award recognises his "gallantry and intrepidity at the risk of his life above and beyond the call of duty".
Sgt Petry is just the second active US military member to receive the award.
The first recipient, Staff Sgt Salvatore Giunta, received his award in November 2010.
Heavy fire
President Barack Obama placed the medal around Sgt Petry's neck at a ceremony at the White House on Tuesday.
"This is the stuff of which heroes are made," Mr Obama said. "This is the strength, the devotion that makes our troops the pride of every American. And this is the reason that - like a soldier named Leroy Petry - America doesn't simply endure, we emerge from our trials stronger, more confident, with our eyes fixed on the future."
After the ceremony, Sgt Petry sought to divert attention toward his comrades and to their families.
"To be singled out is very humbling. I consider every one of our men and women in uniform serving here, abroad, to be our heroes," he said.
"They sacrifice every day and deserve your continued support and recognition."
In May 2008, Sgt Petry's unit of elite Army rangers approached a house in Paktia province in eastern Afghanistan which intelligence suggested held high-value al-Qaeda officials, the US military said.
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Medal of Honor recipients
US Civil War (1861-1865): 1,522
World War I: 124
World War II: 464
Korean War: 133
Vietnam War: 246
Somalia (1993 "Blackhawk Down" mission): Two posthumous
Iraq: Four posthumous
Afghanistan: Five including Sgt Petry (three posthumous)
The unknown, unidentified British WWI soldier buried at Westminster Abbey
The unknown, unidentified French WWI soldier buried at the Arc de Triomphe
The unknown, unidentified Belgian and Romanian soldiers, honouring those who fought alongside US troops in WWI
Source: US Department of Defense
He and another soldier came under heavy fire while crossing the courtyard, and both were wounded - Sgt Petry shot through both legs.
Sgt Petry led the other ranger to cover, then threw a grenade at the enemy fighters. The enemy fighters responded by closing in and returning fire, including by throwing grenades, one of which landed close to him.
"Instantly realising the danger, Staff Sgt Petry, unhesitatingly and with complete disregard for his safety, deliberately and selflessly moved forward, picked up the grenade, and in an effort to clear the immediate threat, threw the grenade away from his fellow rangers," the award citation reads.
The grenade exploded as it left Sgt Petry's right hand, severing it and further wounding him. Sgt Petry applied a tourniquet to his wrist, then radioed for support.
Highest military medal
Sgt Petry has completed two tours in Iraq and six in Afghanistan and has told the military he hopes to remain in the army. He and his wife have four children.
The Medal of Honor is America's highest military medal for valour in combat. It was first granted in 1863 during the American Civil War.
It has been awarded more than 3,400 times, and more than 80 recipients are still living.
The award comes with a $1,000 (£628.41) monthly pension, invitations to presidential inaugural ceremonies and festivities, and other privileges.
In November, the US awarded the Medal of Honor to Staff Sgt Salvatore Giunta, the first soldier still on active duty ever to receive the award.
He also became the first living recipient of America's highest military decoration since the Vietnam War.
Sgt Giunta was given the award in recognition of his bravery during a firefight in the Korengal valley in Afghanistan.
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