Several organisations, including the defence company Lockheed Martin, are working on prototypes of the "virtual firing range".
The system will allow researchers to simulate attacks by foreign powers and from hackers based inside the US.
More than $500m (?309m) has been allocated by the Department of Defense to develop "cyber technologies".
The National Cyber Range project is being overseen by the Defense Advance Research Projects Agency (Darpa), which was also involved in early network research that led to the internet.
When ready, it will function as a test-bed for defensive and possibly offensive technologies such as network protection systems.
Having a controllable mini-internet would allow researchers to carry-out experiments "in days rather than the weeks it currently takes," Darpa spokesman Eric Mazzacone told the Reuters news agency.
Unlike the real internet, the in-house version could be wiped or reset between tests, explained Mr Mazzacone.
Development of the National Cyber Range is currently in the hands of several organisations, including Johns Hopkins University in Baltimore and Lockheed Martin.
One of their prototypes will be selected to go into operation later in the year.
Act of warThe United States has been gradually increasing funding for internet security-related projects.
US defence secretary Robert Gates said that the country was under almost constant cyber attacksIn 2008, the US military was the subject of a serious cyber attack when part of its network became infected by a worm known as agent.btz.
President Obama, in May 2009, declared the cyber threat to be one of the "most serious" challenges facing the country.
Since then, his government claims to have been the subject of several attempted attacks, originating from overseas.
Lockheed Martin, one of the contractors involved in the National Cyber Range project was itself the subject of a security breach in May 2011.
Earlier this month, the Pentagon said it planned to publish proposals to categorise cyber attacks as acts of war.
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