Local MP Todd McClay agreed there was plenty to do before a Rotorua decision could be made.
"It is important that concerns of hapu and iwi are fully taken into account," he said in a statement.
"For this reason I'm committed to working with Rotorua District Council and local iwi to seek agreement on a number of outstanding issues in relation to the Eastern Arterial Route.
"This funding gives us options to continue this dialogue and fully consider the significant opportunities that opening up the eastern side of Rotorua can offer many groups."
Rotorua is included in a $12 million funding bucket for investigation projects, alongside Nelson and Hawkes Bay.
It is predicted that commercial traffic will grow through Rotorua from the Central North Island due to increased forestry-associated traffic destined for the port at Tauranga.
Mr McClay confirmed Rotorua's windfall as part of a regional nation-wide roading funding programme that allocates some $212 million to 14 projects across New Zealand.
These were announced by Prime Minister John Key yesterday.
The funds would come from the "future investment fund". This money is additional to the $360 million already allocated for regional roading across the country.