The Armed Forces Third Sector Resilience Fund, set up by the Scottish government and announced on Tuesday, will support veterans' charities that continue to provide support to former Armed Forces personnel while themselves facing the financial impact of COVID.
Last year, the Scottish Charity Regulator found that 75% of charities had seen a negative impact on their finances because of the pandemic.
Armed Forces charities that have struggled financially in the last year will be able to apply for funding to help them continue delivering support services to former military personnel.
Veterans Scotland executive chairman Chris Hughes said: "We welcome this support to Armed Forces third sector organisations which recognises the vital assistance they provide to veterans, service personnel and their families across Scotland.
"It is much needed, given the current difficult circumstances and additional challenges faced by all in that community and more widely."
Almost a quarter of a million veterans live in Scotland.
Veterans Minister for Scotland Graeme Dey said the fund announcement was a "proud" moment.
"I am particularly proud at the establishment of a £1m fund to support the work of Scotland's veterans' charities who have done such a fantastic job during the pandemic but whose finances have taken a severe hit.
"I know that fund will be of huge help to our charities."
Further details on the criteria for funding will be published in the next month.