The Irish agriculture, fisheries and food minister Mary Coughlan said the government would supply €6.3m worth of funding for the company's €21m wider development plans, as part of the country's bid to encourage higher value food and beverage production.
Glanbia said the investment was a key feature in the company's growth strategy to find unique innovative dairy and food solutions.
While the company claims to already have a significant R&D presence in the country, company managing director John Molony said the further investment in innovation reflected the company's wider expansion ambitions.
"We are committed to the expansion of the Group Innovation Centre in Kilkenny and this investment will further enhance our nutritional and functional food development programmes in line with our aggressive growth targets," he stated.
Glanbia were unavailable for comment on the further details of their research.
Coughlin said that the number of technical experts working in the country's food and beverage industry would be significantly boosted by the centre's expansion.
"This flagship investment will see 23 additional highly qualified R&D jobs at the centre on top of the 25 already in place, making it the largest dedicated R&D centre for a dairy food company in Ireland ," she stated.
Coughlin added that the investment forms part of her department's AgriVision 2015 Plan of Action, which focuses in part on encouraging manufacturers to boost their returns form the supply chain by producing higher value products.
Mike Feeney, director of food for the state development agency, Enterprise Ireland, added that government endorsement of the project offered a significant boost to dairy processors by demonstrating the importance of innovation in their operations.
Sales of functional dairy products are set to rise 48 per cent in Western Europe and 37 per cent in the US up to 2010, according to market research group Euromonitor International.
With dairy processors across the globe therefore increasingly looking to expand their presence towards higher value, functional goods, government funding could be one way of staying in touch with consumer demand.
Other recipients of Ireland's AgriVision 2015 Action Plan include Kerry Ingredients, which received €9.82m for a demineralised whey project, largely aimed at infant formula, and €3m for Carbery Milk Products' functional dairy powder project, which includes installing a new spray dryer and evaporator.
Rising demand for organic food also got a nod with a €3m award to Glenisk to improve organic milk and yoghurt output.
Speciality cheese was represented with a €5m award to DairyGold, as well as €3m to J & L Grubb, maker of the well-known blue cheese, Cashel Blue.
Plans for the scheme were first outlined last August.