"A Fisherman's Daughter" by Jules Breton was commissioned by the northern French city of Douai and hung in the local museum, from where it was looted along with other artworks in the final weeks of the 1914-18 conflict.
It vanished in the post-war chaos, then re-emerged in 2000 on the international art market, only to bounce between Europe and North America as Interpol, lawyers and art experts wrangled over its authenticity and ownership.
"We are pleased to return a piece of French heritage that was stolen during World War I," said John Morton, head of the US Immigration and Customs Enforcement, in a statement.
"We remain committed to combating cultural heritage crimes, which are one of the oldest forms of organized cross-border illicit activity."
France's ambassador to the United States, Francois Delattre, who accepted the painting at a mid-day ceremony in Washington, called its return "yet another symbol of Franco-American cooperation."
"We are celebrating today a gesture of friendship by the United States toward the French Republic," he said.
Most recently in the hands of a fine-art gallery in New York, "A Fisherman's Daughter" will go back on display in Daoui next week.
US customs agents fighting cross-border cultural trafficking have returned more than 2,500 items to more than 22 countries, from an 18th century manuscript from Italy to a bookmark once used by Nazi dictator Adolf Hitler.
Last January, a painting by French impressionist Edgar Degas, "Laundry Women with Toothache," stolen in 1973 from a museum in Normandy, was returned to France after it turned up at a New York auction sale.