The investment will upgrade the oriented strand board (OSB) mill to continuous press technology and nearly double its production capacity.
It has been further supported by a development grant from Highlands and Islands Enterprise (HIE) of up to €15m.
Norbord’s president and chief executive officer, said: “This strategic investment reflects the importance and growth potential of our European operations, and will make our already strong European business an even more meaningful part of Norbord’s financial results.”
Alex Paterson, chief executive of Highlands and Islands Enterprise, praised the investment and the effect it will have on the Scottish economy.
He added: “We have been working very closely with Norbord on their development plans and are delighted to be supporting the company to invest so substantially in its Highland base.
“This development will put Norbord’s Inverness plant on a sustainable footing for decades to come, and is a huge vote of confidence in the company’s Scottish workforce.
“It’s worth noting that the positive impact of today’s announcement will be felt well beyond Inverness and the Inner Moray Firth.
“Norbord is not only a significant local employer in its own right, it also plays an important strategic role in the region’s forestry sector and is a major user of haulage companies and port infrastructure.”
Built in the early 1980s, the Inverness mill – at Morayhill, on the outskirts of the city – was the first in Europe to manufacture OSB, and was also the first OSB plant in Europe to receive Forestry Stewardship Council (FSC) accreditation, reflecting its commitment to the environment.
OSB is an engineered wood-based structural panel designed for construction and other industrial uses, as well as for DIY use and in specialty products like furniture.
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