The Borders-based company bought the site at Dalbeattie in Kirkcudbrightshire as part of its acquisition of Howie Forest Products late last year.
The deal was believed to provide an estimated 30m pay day for founder Robin Howie and his family.
BSW, based at Earlston, in Berwickshire, said the investment in the plant would drive productivity from 230,000 cubic metres of sawn timber a year to more than 350,000 cubic metres.
BSW has a 750-strong workforce and operates six mills in the UK and one in Latvia. It supplies products to the construction, pallet, packaging, fencing, garden and DIY retail sectors.
Tony Hackney, BSW's chief executive, said: "This major investment is all about delivering maximum value from our new Dalbeattie mill and shows our commitment to developing the site.
"State-of-the-art equipment and infrastructure development will help enhance value and give the sawmill total flexibility."
Sales director Laura Smith, Howie's daughter, hailed it as a "fantastic opportunity", adding: "It can't come soon enough, but we do expect to see the increased volumes in spring 2011."