Work will begin in October on the construction of a new 64,600 sq ft extension at Edinburgh Airport, which will incorporate a larger state-of-the-art security area to allow a greater number of passengers to pass through body scanners and baggage checks at any one time.
The extension will also include new retail areas and a new airline business centre.
It comes just weeks after Edinburgh Airport reported its busiest ever July, with more than one million passengers passing through the capital's airport.
As a result of moving the security area from the main terminal building into the new extension, airport chiefs say valuable space within the terminal will be freed for more passenger and retail spaces, including the airport's first walk-through store.
The new security facility is expected to be up and running in late 2014, with the shopping areas following in 2015.
The overhaul will also result in the entrance to the terminal being moved closer to the new tram stop.
Edinburgh's trams are expected to begin running between the city centre and the expanding airport next summer.
Edinburgh Airport chief executive, Gordon Dewar, said: "This investment is the first of a number of developments that will build Edinburgh Airport's profile around the world, helping us to compete more energetically with other UK airports and those in mainland Europe."
David Birrell, chief executive of Edinburgh Chamber of Commerce, said: "A thriving airport is of critical importance to Edinburgh as Scotland's capital, as its financial and cultural hub, and as a gateway to the nation as a whole.
"The city is already benefiting from the knock-on effect of a successful airport."
More than 40 airlines serve 100-plus destinations from Edinburgh, with some 9.2 million passengers a year currently passing through the airport.