News of the Higgs Centre for Innovation was announced in the Autumn Statement.
Chancellor George Osborne said it was appropriately timed in the week that Professor Higgs travels to Stockholm to collect his Nobel Prize.
The centre, due to open in 2016, will be built at the UK Astronomy Technology Centre, operated by the Science and Technology Facilities Council (STFC), at the Royal Observatory, Edinburgh.
It will focus on "big data" - large-scale computer processing - and space, two of the most promising technologies of the future, according to the Government.
As well as a team of scientists and students, the centre will house up to 12 small businesses.
Prof Higgs, who spent his career at the University of Edinburgh, was this year awarded a share of the Nobel Prize in Physics for his prediction nearly 50 years ago of the Higgs boson, a theoretical subatomic particle responsible for mass, nicknamed the "God particle".
Prof Higgs, 84, said: "This support from the Treasury and the STFC will create an environment in which future generations of scientists from around the world can share and develop ideas."
Professor Sir Timothy O'Shea, principal of the University of Edinburgh, added: "We look forward to working with all partners in this new forum for world quality research."