The French manufacturer announced in November last year that its Tayside plant would close by mid-2020, with the loss of all 850 jobs.
But the new investment - supported by Michelin, Scottish Enterprise and Dundee City Council - will transform the site into the Michelin Scotland Innovation Parc (MSIP) over the next decade.
The Parc is intended to be an “ambitious centre for innovation and skills where industry and academia come together with a focus on sustainable mobility, clean transport and low carbon energy”.
Minister said it would include an innovation hub which will offer office space as well as business and innovation support services.
Finance secretary Derek Mackay said: “This joint funding commitment from the Scottish Government and Michelin demonstrates our shared determination to transform the site to be a global destination for innovation.
“MSIP will attract companies, research institutions and a highly skilled workforce. We want Scotland to lead the way in developing and manufacturing the technologies of the future and MSIP will be vital in helping us achieve this.”
Michelin Scotland Innovation Parc chief executive John Reid said: “This funding marks a significant milestone and allows us to move ahead with the construction of the Innovation Hub, the Skills Academy and the other works to prepare the site for its new companies.
“It will allow us to develop a vibrant site with a long lasting benefit for Dundee and Scotland, as well as being a key part of Scotland’s response to the global climate emergency.
“Throughout the last year our priority has been to support our employees and their families and 414 people have already secured their next role. A year ago, I wouldn’t have believed we would have been able to make this much progress. We still have a long way to go but we should be encouraged by how things have progressed in the last year.”