The loss was down to factors including a hit from United States tax changes, costs related to the sale of its African unit, and continuing PPI payments.
Barclays shares rose 4% to 210.6p in early trading on Thursday.
On an after-tax basis, the company recorded an attributable loss of 1.9 billion pounds, compared to profit of 1.6 billion pounds a year ago.
Barclays said it set aside £1.2bn for litigation and conduct, including £700m for payment protection insurance (PPI), but that there were no new charges for the mis-selling scandal.
Boss Jes Staley said it had been a year of "considerable strategic progress" as he reported pre-tax profits of £3.54bn for 2017, up from £3.23bn in 2016.
"We have already started to see some of the benefits of our work in 2017".
He said the increase in profit was "a result of our team's focus on execution", including a digital banking milestone of a ten millionth customer, increased banking fee share in CIB, strong income from the consumer, cards and payments business, and perhaps above all continued capital generation that saw the CET1 ratio stand at 13.3%.
Barclays declared its intention to more than double dividend payouts in 2018 to 6.5p per share after lower costs helped lift profits previous year - though they were still slightly short of analyst's forecasts.
Barclays took a £2.5 billion hit from the sale of its African business and suffered a "one-off net tax charge of £901 million" due to Donald Trump's new United States tax plan, the bank said in its results statement, released on Thursday morning.
Income decreased 2% to 21.08 billion pounds from 21.45 billion pounds past year, primarily driven by lower revenue in Barclays International and Head Office, whilst impairment was broadly stable.
Staff shared out a £1.51bn total bonus pool for 2017, down from £1.53bn in 2016.
Barclays said Staley was awarded 1.69 million shares with a face value of nearly 3.3 million pounds as at June 23, as part of the bank's 2017-2019 long term incentive plan.