<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0303</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2010-10-29</periodOfReport>

    <issuer>
        <issuerCik>0000005272</issuerCik>
        <issuerName>AMERICAN INTERNATIONAL GROUP INC</issuerName>
        <issuerTradingSymbol>AIG</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001486267</rptOwnerCik>
            <rptOwnerName>WILSON MARK A</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>AMERICAN INTL ASSURANCE</rptOwnerStreet1>
            <rptOwnerStreet2>ONE CONNAUGHT ROAD CENTRAL</rptOwnerStreet2>
            <rptOwnerCity></rptOwnerCity>
            <rptOwnerState>K3</rptOwnerState>
            <rptOwnerZipCode></rptOwnerZipCode>
            <rptOwnerStateDescription>HONG KONG</rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isOfficer>1</isOfficer>
            <officerTitle>EVP - Life Insurance</officerTitle>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable></nonDerivativeTable>

    <derivativeTable>
        <derivativeTransaction>
            <securityTitle>
                <value>Long-Term Performance Units</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>42.0100</value>
                <footnoteId id="F1"/>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2010-10-29</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>245.9732</value>
                    <footnoteId id="F2"/>
                </transactionShares>
                <transactionPricePerShare>
                    <footnoteId id="F4"/>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <exerciseDate>
                <footnoteId id="F2"/>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F3"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>245.9732</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>245.9732</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeTransaction>
        <derivativeTransaction>
            <securityTitle>
                <value>Long-Term Performance Units</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>42.0100</value>
                <footnoteId id="F1"/>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2010-10-29</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>67.4443</value>
                    <footnoteId id="F5"/>
                </transactionShares>
                <transactionPricePerShare>
                    <footnoteId id="F4"/>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <exerciseDate>
                <footnoteId id="F5"/>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F3"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>67.4443</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>313.4175</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeTransaction>
    </derivativeTable>

    <footnotes>
        <footnote id="F1">Represents AIG's share price on the date of grant; these securities do not carry a conversion or exercise price.</footnote>
        <footnote id="F2">This award represents the portion of a grant of fully vested LPTUs that is based on the value of common stock. The LTPUs are based on a mix of common stock and AIG's 8.175% Series A-6 Junior Subordinated Debentures (the &quot;Hybrid Securities&quot;), and represent 20 percent common stock and 80 percent Hybrid Securities, by value, on the date of grant. This award will be payable in cash based on the values of the underlying securities on the third anniversary of the grant date. The Reporting Person disclaims that the reported portion of the LTPUs is a &quot;derivative security&quot; required to be reported under Section 16 of the Securities Exchange Act of 1934.</footnote>
        <footnote id="F3">These securities do not have an exercisable date or expiration date.</footnote>
        <footnote id="F4">These securities do not carry a conversion or exercise price.</footnote>
        <footnote id="F5">This award represents the portion of a grant of fully vested LPTUs that is based on the value of common stock. The LTPUs are based on a mix of common stock and AIG's 8.175% Series A-6 Junior Subordinated Debentures (the &quot;Hybrid Securities&quot;), and represent 20 percent common stock and 80 percent Hybrid Securities, by value, on the date of grant. This award will be payable in cash based on the values of the underlying securities on the first anniversary of the grant date. The Reporting Person disclaims that the reported portion of the LTPUs is a &quot;derivative security&quot; required to be reported under Section 16 of the Securities Exchange Act of 1934.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>/s/ Kathleen E. Shannon, by POA for Mark A. Wilson</signatureName>
        <signatureDate>2010-11-02</signatureDate>
    </ownerSignature>
</ownershipDocument>
