The A82 will be closed for up to three months from October while a viaduct is constructed on the shores of Loch Lomond at Pulpit Rock and a section of the existing carriageway is widened.
Transport Scotland, the Government agency overseeing the project, said it had named McLaughlin & Harvey as its preferred bidder to carry out a £9.2 million contract for the upgrade over 12 months, with work due to commence in spring.
A number of temporary road closures, which could add around 45 minutes to a journey from Dumbarton to Oban, are also likely to be made with drivers given suitable advance warning, the agency said.
Pulpit Rock has formed a notorious bottleneck on the A82 between Tarbet and Ardlui as the carriageway narrows to only 7.2 yards wide, requiring traffic lights to be installed, originally as a temporary measure, more than 30 years ago as traffic was restricted to one lane.
The work will see 546 yards of new road constructed and a viaduct built running parallel to the shore supported by piers of up to 18ft in height.
A section of the existing road will be widened by cutting into rock on the shore side to allow vehicles to pass more easily. When finished on January 6, the traffic lights will be removed and two lanes of traffic will operate.
Transport Minister Keith Brown said: "The A82 Pulpit Rock scheme sits within one of the most unique and scenic landscapes in Scotland that brings many visitors to Loch Lomond. We fully recognise delivery will not be without its engineering challenges.
"Our commitment to improve the traffic flow at Pulpit Rock is unwavering and, on completion, this project will bring real benefits for businesses and communities in the Highlands and Islands, not least the haulage industry.
"This is why I am pleased the announcement of our preferred contractor shows, at long last, Pulpit Rock will have a road befitting its setting and importance."
The work was welcomed by the A82 Partnership, which has campaigned for improvements to be made to the route.
However, Brian Murphy, a Fort William Labour councillor and chairman of the A82 Partnership, warned the disruption would be difficult for businesses along the route as well as motorists driving between the west Highlands and central belt.
"The closure will be a worry as it's an awful long way around. We're also worried about what will happen if the Rest and Be Thankful is closed due to a landslide as we've seen quite a few of those in recent years," he said.
Mr Murphy stressed there was "more to be done" to improve the A82 once the Pulpit Rock work was complete.
A £5.5m scheme to construct a bypass at Crianlarich is due to start in summer and be completed in 2014, while design work is under way to upgrade a five-mile sec- tion of the road north of Tarbet on the shores of Loch Lomond.
The route has become notorious among drivers for its narrow sections which can see HGVs and coaches forced to reverse as there is no room to pass each other.
Argyll and Bute Council's lead councillor for infrastructure and development, John Semple, said: "A better connected Argyll and Bute is one of my ambitions. The A82 is one of the main arterial routes into the area, along with the A83 and A85, and I will be glad to see this work being progressed.
"While it will cause some disruption during construction, completion will see vastly improved quality and safety of journeys between the western Highlands and central Scotland."