Prof Michael Arthur said he hoped the fellowship programme which will be created with the fund will act as a magnet for talent.
The cash gift was made by retired Seattle-based businessman Peter Cheney who studied in the city in the late 1960s before going on to become co-president of Mars.
The money will be used to create a fellowship programme to attract academics to the university to lead research in the arts and sciences.
The plan is for fellowships to be run for one or two years with the funding freeing up the fellows from “the day-to-day commitments of academia”.
Mr Cheney told the Yorkshire Post he hoped the legacy of the donation from him and his wife Susan would be helping to push Leeds University into the top 50 in the world.
He added: “I chose an endowed programme so that it can last forever rather than a building which might be knocked down and replaced after another 25 to 50 years.”
Prof Arthur said: “Our Brotherton Library, Parkinson Tower, Stanley and Audrey Burton Gallery and Marjorie and Arnold Ziff Building are permanent reminders of how our history has been shaped by individual generosity.
“Just as the Rhodes Scholarships are uniquely associated with Oxford, so the Cheney Fellowships will become a permanent point of distinction for the University of Leeds and a magnet for talent.
“This scheme will have a major impact, not just on the fellows who benefit from this tremendous opportunity for personal development, but also on our staff and students. We are so grateful to Peter and Susan for their generosity.”
The first fellow, to be recruited to start in September, will work in one of two key fields – water or medical technologies – both global challenges and areas of research excellence in the university.
After graduating in 1969, Channel Islander Mr Cheney began his career in the pharmaceutical industry.
He joined the UK pet-care business of Mars in 1972, where he spent several years working in research and product development. Over the following years, he held a number of roles in the company, becoming one of Mars’s two co-presidents in 2000. Since his retirement in 2004, he and Susan, a retired dentist, have divided their time between homes in California and Washington state, as well as travelling widely.
Their gift was made to the North American Foundation for the University of Leeds, an independent body which generates grants from the contributions of alumni of the university and its supporters in the US.
Mr Cheney said: “My wife and I made the conscious decision not to have children and you reach a stage in your life where you have some financial means and want to give something back.”
He said he had been attracted to Leeds as a student because of the opportunity to study in two subject areas and described his life in the city as “hard work but some of the most fun times of my life”.
Figures published earlier this year showed Yorkshire universities saw an increase in both the number of donors and the value of their gifts in the previous academic year.
University income from philanthropic gifts in Yorkshire increased by 60 per cent to £18.5m in 2010-11.