The NATO-led coalition in Afghanistan, Resolute Support, said Saturday that the incident was under investigation and that the two wounded United States service members are being treated and are in stable condition.
The attack took place in southern Afghanistan on Saturday, a statement from the Nato-led Resolute Support mission said.
Details of the incident, which is under investigation, were not immediately released.
The last insider attack occurred in August of 2017. The death is the third American military fatality in Afghanistan this year.
To date this year, three other troops have been killed in hostile incidents in Afghanistan.
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The apparent insider attack came just over a year after three USA soldiers were killed in an attack by an Afghan soldier.
The two wounded service members are in a "stable" condition, North Atlantic Treaty Organisation said, adding it would not be releasing any further details until next-of-kin had been informed.
Insider attacks on Afghan forces - and deaths resulting from those attacks - have increased by more than 50 percent compared to the same time frame past year.
The Taliban released a statement praising an Afghan soldier for carrying out the attack, without taking credit for it themselves. In the six months prior to June, there were two US military deaths due to hostile actions and 22 USA military personnel wounded, according the DoD report.