The story can be viewed as being important in American literature because it is an excellent example of Poe's theory of the short story, which he explained in detail in an essay. In addition to being a short story writer and poet, Poe was also a noted literary critic of his day; his literary criticisms, especially in regard to short story writing, are still recognized for their merit. Here is a passage that discusses Poe's role in influencing criticism in modern American literature:

Poe, moreover, judged others by these same standards [his theory of short story writing]. By doing so, he is establishing the rules and methods common to New Criticism, the leading school of literary analysis in the twentieth century with its insistence that the text must be interpreted as a self-contained unit apart from the critic's opinions of its author or the suitability of its themes.

http://liu.english.ucsb.edu/wiki2/index.php/Poe's_Short_Story_Theory

Also, gothic literature was gaining prominence in American literature in the nineteenth century, largely as an outgrowth of Romanticism. Poe stands as the most noted American writer of the gothic tale. "The Masque of the Red Death" is certainly one of his most famous. Others include "The Pit and the Pendulum," "The Fall of the House of Usher," and "The Cask of Amontillado," to name only three of the most well known.

So, "The Masque of the Red Death" is important in American literature because it exemplifies Poe's short story theory and gothic writing at its best. Here is a quote from an enotes source on gothic literature that states that Poe's gothic writing, in fact, has influenced contemporary American literature:

Poe is particularly important to the ongoing influence of the Gothic on contemporary literature, moving the genre from an external to an internal focus.

http://www.enotes.com/gothic-movement/representative-authors

This quotation refers to Poe's focus on character development in his stories, in addition to including the common elements of gothic writing.

Why is "The Masque of the Red Death" by Edgar Allan Poe significant in American literature?

"Masque of the Red Death" is a masterpiece of Gothic horror fiction. The story is filled with symbolism and literary references and is tightly woven around a terrifying plot, leading up to a horrific, gory ending. The supernatural elements of the story, the palpable presence of death, and the phantasmagorical party thrown by Prince Prospero all contribute to the mood of Grand Guignol. Poe believed in the unity of the short story, and "Masque of the Red Death" demonstrates Poe’s mastery of creating unified narratives that lead up to a single effect of horror.

Why is "The Masque of the Red Death" by Edgar Allan Poe important American literature?

I don't know that :The Masque of the Red Death" stands as one of the most important pieces of American literature, but it is certainly one of Poe's most famous stories, and for good reason. In Poe's theory of short story writing, he held the idea that a story should be brief enough to be read in one sitting and that it should create one strong emotional reaction in the reader. Everything in the story, he proposed, should be directed to that end. "The Masque of the Red Death" lives up very well to his self-imposed standards.

From the opening paragraph until the closing one, Poe creates a sense of horror that grows ever stronger as the story progresses. Beginning with a vivid description of the Red Death, the "hideous" disease that had decimated Prince Prospero's country, the story ends with the horrible deaths of all in the "blood-bedewed halls" of Prospero's castle. Blood serves as the central motif throughout.

This final horror is heightened by the earlier appearance of the mysterious, sinister figure who had materialized suddenly to move among Prospero's guests:

The figure was tall and gaunt and shrouded from head to foot in the habiliments of the grave. The mask which concealed the visage was made so nearly to resemble the countenance of a stiffened corpse that the closest scrutiny must have had difficulty detecting [the difference] . . . . His vesture was dabbled in blood--and his broad brow, with all the features of the face, was besprinkled with the scarlet horror.

This gory figure, then, looks like the Red Death itself which will soon overtake all. The last line of the story underscores its carefully crafted eerie tone:

And Darkness and Decay and the Red Death held illimitable dominion over all.

Thus, "The Masque of the Red Death" is one of Poe's finest horror stories, an excellent piece of American gothic literature.

Finally, the story accomplishes more than creating Poe's desired single effect. Through his masterful employment of irony and symbolism, Poe develops provocative allegorical themes in regard to human nature and the inevitability of death.