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

    <schemaVersion>X0303</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2010-12-20</periodOfReport>

    <notSubjectToSection16>1</notSubjectToSection16>

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

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001245749</rptOwnerCik>
            <rptOwnerName>LEWIS ROBERT EDWARD</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>AMERICAN INTERNATIONAL GROUP, INC.</rptOwnerStreet1>
            <rptOwnerStreet2>180 MAIDEN LANE</rptOwnerStreet2>
            <rptOwnerCity>NEW YORK</rptOwnerCity>
            <rptOwnerState>NY</rptOwnerState>
            <rptOwnerZipCode>10038</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isOfficer>1</isOfficer>
            <officerTitle>Senior Vice President</officerTitle>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable>
        <nonDerivativeTransaction>
            <securityTitle>
                <value>Common Stock</value>
            </securityTitle>
            <transactionDate>
                <value>2010-12-20</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>6654.0000</value>
                    <footnoteId id="F1"/>
                </transactionShares>
                <transactionPricePerShare>
                    <value>53.4200</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>13525.0000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </nonDerivativeTransaction>
        <nonDerivativeTransaction>
            <securityTitle>
                <value>Common Stock</value>
            </securityTitle>
            <transactionDate>
                <value>2010-12-20</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>229.0000</value>
                    <footnoteId id="F2"/>
                </transactionShares>
                <transactionPricePerShare>
                    <value>53.4200</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>13754.0000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </nonDerivativeTransaction>
    </nonDerivativeTable>

    <derivativeTable>
        <derivativeTransaction>
            <securityTitle>
                <value>Restricted Stock Unit</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>53.4200</value>
                <footnoteId id="F3"/>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2010-12-20</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>5615.0000</value>
                    <footnoteId id="F4"/>
                </transactionShares>
                <transactionPricePerShare>
                    <footnoteId id="F6"/>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <exerciseDate>
                <footnoteId id="F4"/>
            </exerciseDate>
            <expirationDate>
                <footnoteId id="F5"/>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>5615.0000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>5615.0000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeTransaction>
    </derivativeTable>

    <footnotes>
        <footnote id="F1">These shares are restricted from transfer until December 20, 2013 pursuant to the Restricted Stock Award Agreement with the Company dated December 20, 2010. This award reflects 13,572 shares less 6,918 shares withheld for taxes.</footnote>
        <footnote id="F2">These shares are restricted from transfer until March 15, 2012 pursuant to the Restricted Stock Award Agreement with the Company dated December 20, 2010. This award reflects 468 shares less 239 shares withheld for taxes.</footnote>
        <footnote id="F3">Represents AIG's share price on the date of grant; these securities do not carry a conversion or exercise price.</footnote>
        <footnote id="F4">This award represents RSUs that will vest on the second anniversary of grant.  Thereafter, the RSUs will be payable in cash based on AIG's share price on the first date ON OR AFTER THE THIRD ANNIVERSARY OF THE GRANT DATE that: (i) with respect to 25% of the RSUs, AIG has repaid at least 25% of the aggregate financial assistance received under the Troubled Asset Relief Program (the &quot;TARP Assistance&quot;), (ii) with respect to an additional 25% of the RSUs, AIG has repaid at least 50% of the TARP Assistance, (iii) with respect to an additional 25% of the RSUs, AIG has repaid at least 75% of the TARP Assistance, and (iv) with respect to the remainder of the RSUs, AIG has repaid 100% of the TARP Assistance.  In each case, the RSUs will be paid promptly after the amount is determined.</footnote>
        <footnote id="F5">These securities do not have an exercisable date or expiration date.</footnote>
        <footnote id="F6">These securities do not carry a conversion or exercise price.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>/s/ Kathleen E. Shannon, by POA for Robert E. Lewis</signatureName>
        <signatureDate>2010-12-22</signatureDate>
    </ownerSignature>
</ownershipDocument>
