Accrol is a leading manufacturer of soft tissue products ranging from toilet paper to kitchen towels and facial tissues.
The new facility will create 80 jobs and will support its continued growth as it looks to increase its market share of the paper tissue industry.
CEO Steve Crossley said: "This additional capacity underlines our strategy of investment ahead of growth in state-of-the-art machinery and facilities.
“It will position Accrol to benefit from underlying organic growth in the discount sector and enable further growth with the major multiples.
“At the same time, we will focus on improving efficiency at the existing Blackburn sites to further increase our total capacity."
The site will initially house two high speed tissue converting lines purchased by Accrol in April 2016 and also provide finished goods warehousing space, with potential to add two further converting lines if required.
Installation and commissioning of the first two lines will take place during late 2016, with manufacturing planned to start in January 2017.