Hutchison Ports, which owns the freight terminal in Suffolk, is extending berths eight and nine by 200yds (190m).
The quay and approaches are being dredged to a depth of 59ft (18m) to allow larger container ships to dock.
The extended berths at the southern end of the port are due to be completed by mid-2015.
The extended quay will have three new ship-to-shore gantry cranes which will have a reach across ships which are 25 containers wide.
Clemence Cheng, Hutchison Ports (UK) chief executive officer, said: "The scale of operations at the port already gives us the ability to berth more large container ships simultaneously than other ports in the UK.
"The new extension will increase the berthing permutations we can offer and continue to ensure that we turn our customers' vessels around in the quickest possible time."
The Port of Felixstowe has begun dredging one million cubic metres of sea bed as it prepares for more expansion.