Industry Policy Minister Elaine Zakaib says as many as 700 workers could be employed at the facility in the next three years.
Zakaib told a news conference on Monday that the government has approved the sale of the shipyard from Ontario's Upper Lakes Group to Zafiro Marine, a British company.
The government was involved in the sale through its investment arm, Investissement Quebec, which loaned Davie $35 million in the form of convertible debentures.
Investissement Quebec had recommended that the sale be approved.
Upper Lakes Group acquired Davie in the hopes of winning a large shipbuilding contract from the federal government which was embarking on an ambitious $35 billion plan to renew its naval fleet. Quebec lost out in the bidding competition, to Halifax and Vancouver.
Upper Lakes subsequently decided to withdraw from the shipyard purchased with SNC-Lavalin, saying the financial risk was too big.
Davie has employed more than 1,000 people in the past.