By the end of 1995, he envisages shrinking the army even further, to 1.7 million troops.
Grachev, visiting Russia's Far East, made his remarks as a pledge to follow a presidential order seeking deep cuts in the ranks of the military.
According to Interfax, President Boris Yeltsin signed a decree Monday ordering the steep reduction.
The president has in the past said the ideal size of the Russian Army should be about 1.5 million troops.
Despite Tuesday's promise to fulfill the decree, Grachev has complained bitterly about attempts to reduce the army's size and budget.
Pledges to cut the army are not always as sincere as they seem.
In June, Grachev promised that a reduction of 300,000 troops would bring the army down to 1.9 million this month rather than by January.
Later in June, Western and Russian military analysts said the army was intentionally inflating its numbers to retain its swollen ranks of officers and to gain higher budget appropriations.
Those comments indicated that any reduction of troops might be meaningless, since the size of the army was overstated.
Also Tuesday, Grachev said the army would keep its troops on the Far Eastern Kuril islands because they were of vital importance to the country's defense, according to Itar-Tass. The islands are part of an archipelago at the center of a sovereignty dispute between Russia and Japan.
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