The installation of an additional production line will increase butter production by 2,000 tonnes to more than 10,000 tonnes a year and expand the range of butters the company is able to offer its customers.
"This new investment will help to further develop our butter-making capabilities, both in terms of the range and quality of the products we offer," said operations director, Mark Robertson.
"The investment is great news for all at the creamery and gives us a further boost as we enter the new year."
Lockerbie branded butter won the supreme championship at last year's Royal Highland Show and is sold in a range of retailers, including Tesco. The creamery also produces a variety of butters for the foodservice sector.
Milk Link is also the largest cheese producer in the UK and employs more than 1,000 people at four processing facilities and a packing facility in Shropshire.
The company also announced the launch of a new low-fat cheese for the foodservice sector. It contains 30 per cent less fat than standard cheddar with, the company claims, no compromise on taste, flavour and cookability. The new cheese has been endorsed by the Craft Guild of Chefs.