A tiny sensor implanted in the brain of the patients sends electrical signals to a computer which moves the arm.
It allowed one woman to drink unaided for the first time in nearly 15 years, the BBC reports.
The technique, described in the journal Nature, links a sensor implanted in the brain to a computer, which translates electrical signals into commands.
In years to come, scientists want to reconnect the brain to paralysed limbs to enable them to function again.
The project was a partnership by Brown University and the Department of Veteran Affairs, Rhode Island, and the Department of Neurology at Massachusetts General Hospital and Harvard Medical School, Boston.
In 2006 in a previous Nature paper, the team showed that the same neural interface system could be used by a paralysed patient to control a cursor on a computer screen.
The key is a tiny sensor implanted on to the surface of the motor cortex.
Thinking about moving an arm or hand activates neurons in this part of the brain and the electrical activity is sent via a cable to a computer, which translates them into commands.
Both patients in this latest research project were paralysed many years ago by strokes and have no viable movement below the neck.
Video footage shows 58-year-old Cathy Hutchinson using the neural interface to control a robotic arm and bring a flask of coffee to her mouth. It was the first time in nearly 15 years that she had taken a drink unaided.
'Feelings of hope'
She communicates by picking out letters on a board using eye movement and wrote: "I couldn't believe my eyes when I was able to drink coffee without help. I was ecstatic. I had feelings of hope and a great sense of independence."
That was echoed by Prof John Donoghue, a neurologist at Brown University.
He told the BBC: "There was a moment of true joy, true happiness. It was beyond the fact that it was an accomplishment. I think it was an important advance in the field of brain-computer interfaces that we had helped someone do something they had wished to do for many years."
This research shows that the part of the brain that deals with movement continues to function more than a decade after paralysis.
Furthermore, the chip continues to function long-term - Cathy Hutchinson had the sensor fitted six years earlier.
The technology is years away from practical use and the trial participants used the system under controlled conditions in their homes with a technician on hand.
Four longterm goals
Nonetheless, another of the report authors, Prof Leigh Hochberg, said the team had four goals:
* To develop effective communications systems for people with locked-in syndrome, giving them control over a cursor on a computer screen
* To create improved neural control of robotic-assistive devices for patients with paralysis
* To use the system to allow amputees to control a prosthetic limb by the neural interface
* To enable paralysed patients to reconnect their brain to their limbs using this system so that they could use their own hand to pick up a coffee cup.
Prof Hochberg said the third and fourth goals were distant ambitions but they were the "real dream" for people with such disabilities. The researchers say it is impossible to put a timescale on when this might be achieved.
Story Landis, director of the National Institute of Neurological Disorders and Stroke, which part-funded the work, said: "This technology was made possible by decades of investment and research into how the brain controls movement.
"It's been thrilling to see the technology evolve from studies of basic neurophysiology and move into clinical trials, where it is showing significant promise for people with brain injuries and disorders."