The centre, which will be set up over the next year, will have capacity to process 1,000 tests a day for genomic testing, which allows scientists to monitor the spread of the virus and any small changes.
The centre will speed up the amount of time it takes to process genomic tests, which First Minister Nicola Sturgeon said would help scientists “identify new variants at as early a stage as possible”.
Announcing the project at the daily coronavirus briefing on Wednesday, Ms Sturgeon said: "I guess in simple arithmetic terms, if we were under 1,000 cases a day, once we get this operating at capacity, we would have the capacity to do that [sequence all cases].”
The UK is considered a world leader in genomic testing.
Chief medical officer Dr Gregor Smith said: “One of the things that’s happened over the course of this last 12 months has been the development of genomic sequencing in terms of how we track and survey the spread of this virus across the country.
"It's one of the very important clinical developments. It’s allowed us to monitor the behaviours of the virus and the changing of the virus over time as well, which has been absolutely fabulous.”
He said sequencing would allow Scotland to “stay ahead of the virus”, ensure tests and vaccine development stay appropriate and also understand more about other infectious pathogens across the country.
Dr Smith said: "I would like to get to a stage where the infection is so low that we can track all the virus sequences and make sure there is that degree of surveillance over the development of this virus so we stay ahead in that way.”
He said the ability to sequence the virus would be much faster in future.
“Over time, what I expect is that with that increased capacity, we will actually see a much shorter turnaround time in terms of how we get those results,” he said.
“At the moment, it’s a fairly complex process the sequencing goes through across a number of different sectors. By doing this and becoming much more sustainable within Scotland itself, we’ll be able to shorten that period in some respects.”