The state government is helping fund a multi-million expansion at Frew Foods International, Stawell, through its Regional Jobs Fund.
Agriculture Minister Mary-Anne Thomas said the expansion would help create 250 jobs and unlock new export opportunities.
"This project will go a long way in supporting the region, creating new jobs and boosting the local economy," Ms Thomas said.
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Frew Foods International is Stawell's largest employer with almost 500 staff processing up to 900,000 sheep each year for local and overseas markets, including the United States and Canada.
The abattoir is a key lamb supplier for supermarket chains Woolworths and Aldi.
The project will almost double Frew Foods' current lamb production, with works already underway to upgrade equipment to process more sheep at a lower cost.
Ms Thomas said this would help the company grow its lamb exports across Europe and North America.
She said the company was also set to install a cold storage room at the site to drive down storage costs and a traceability system to track livestock during any potential disease outbreaks.
The upgrade would enable Frew Foods to create a wide range of new roles at the abattoir including managers, labourers, forklift drivers, drovers and maintenance workers, she said.
Established in 1984, Frew Foods International is an Australian family business that merged with local company, Thomas Foods International, in 2020.
