Prime Minister Stephen Harper says regulatory changes have been made to allow the tunnel project at Billy Bishop airport.
The 240-metre tunnel will compliment the current ferry service — said to be one of the world's shortest regular ferry routes.
Some 1.5 million people use the island airport each year.
Some critics worry such a link will mean more traffic and more flights.
The project is expected to take two years to complete.
"The construction of the pedestrian tunnel will create jobs," Harper said at a groundbreaking ceremony Friday.
"(It will) help manage passenger flows to and from the airport."