"This will be a world class experience that both young and old, locals and visitors will enjoy," he said.
At 553m long, the treewalk consists of a series of 23 suspension bridges between 22 Redwood trees 12m above the forest floor.
The Night Lights Project is planned to be operating by January 2017.
"It is anticipated the experience will take around one hour to complete and can be purchased as a Night Lights experience or as a Treewalk day and night combo pass.
"Over summer the experience will be open to 10pm and during autumn and winter will operate until 8pm," Mr Schmid said.
Rotorua MP Todd McClay said the project was a great way to showcase one of Rotorua's natural assets.
"Our great city was one of New Zealand's first real tourist destinations, and more than a third of the country's international visitors come here. We want to keep them coming."
Mr McClay said funding projects like this helped do that by building on Rotorua's strengths and ensuring there were facilities to support them.
"Tourism brings money into our local economy, visitors support our local businesses and help create new jobs."
Last month, it was announced that Te Puia would receive $2.5 million for new facilities at the New Zealand Maori Arts and Crafts Institute. Another previous recipient of Tourism Growth Partnership funding was Skyline Gravity Park.