Siemens plans to relocate its gas turbine plant from Freeman Road to a new 7,000 sq m (75,347 sq ft) building at Teal Park, creating new jobs.
It expects construction to be completed by January 2018 with all of the Freeman Road employees moved in by spring.
Labour council leader Ric Metcalfe said it was "tremendous news" and a "very big vote of confidence" in the city.
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As part of the investment, the German firm is also buying 11 acres of land on the Teal Park estate.
The new building would be located next to Siemens' manufacturing and research facility at the site.
Neil Corner, managing director of Siemens in Lincoln, said: "The new Global Service Operations Centre will help to improve efficiency by having everything in close proximity such as spare parts, turbine engine units, tooling and safety equipment.
"Hopefully that will bring some jobs as we need them and as we create them."
Mr Metcalfe said: "Siemens are a hugely important presence in the local economy... and Lincoln's got a very skilled workforce."
About 1,500 people are employed at Siemens in Lincoln making it the city's largest engineering employer.
An engineering giant has announced it will invest £35m moving and expanding its existing facility in Lincoln.