The six-storey building on the university's Christchurch campus in Oxford Tce will house laboratories, research projects, and specialist equipment.
Construction is expected to start in the second half of 2019 and to be completed by 2022, in time for the Christchurch campus's 50th anniversary.
It will be on the site of the former Tillman's furniture store, bought by the university after the 2011 Christchurch earthquake.
Otago's Christchurch campus is part of the division of health sciences and a training base for medical students in their three clinical years.
Christchurch campus dean David Murdoch said plans for the building had been in the works for 10 years, but were interrupted by the earthquake in 2011.
The campus had expanded considerably over its 45-year life and now had about 1000 students, a third of them medical students, he said.
Medical student numbers were capped by the Government, but it was possible the new building would draw other students, such as postgraduate nurses, to Christchurch.
The new Christchurch building is part of almost $500 million worth of construction projects the university has under way or has recently completed.
They include the $130 million project to rebuild and expand New Zealand's national dentistry school in Dunedin.
In August, the university also announced a new $28.2 million dental facility for Counties-Manukau.