Barragan said at a news conference that the pope hoped his donation would induce Catholics around the world to contribute to the new charity, The Good Samaritan.
The Mexican cardinal, who is head of the Pontifical Council for Health and Pastoral Care, rejected criticism of the Church because of its stance against the use of condoms as a means of preventing the spread of AIDS.
"I don't care about the moral problem at the moment. Everyone has the right to his point of view on the subject. But while we're discussing whether we should say yes or no to the use of condoms, millions of people are dying," Barragan said.
"That reminds me of the theologians who argued over how many devils would fit on the head of a pin, while Constantinople was falling," -- a reference to the eastern capital of Christianity, now Istanbul, which fell to the Ottoman Empire in 1453.
Referring to the 38 million people with AIDS around the world cited in a recent UN report, Barragan said: "What's important is that these people are dying and we must help them."