Mayor Steve Chadwick said the improvement of the eastern roading corridor was "crucial" for the city and it was great it was getting under way after a number of years.
"This will help to alleviate current pressures and will help to support growth in a part of our city where development of new housing areas is under way."
The project would also involve the upgrade of the Tarawera roundabout to a signalised intersection, operated by traffic lights, as well as improvements to the SH30/Sala St intersection.
It also included four-laning a section of the highway between Allen Mills and Iles Rds, new shared paths and new powerlines and water mains.
Construction will start on February 18 and will be done in stages – with final completion expected in late 2021.
Delays to people's journeys during the first stage were expected to be minor.
The next stage of the project would hone in on the section of State Highway 30 from Iles Rd to Rotorua Airport.