Public Safety Minister Vic Toews has sprinkled $1.7 million among 11 research proposals, including an analysis by defence researcher Arnav Manchanda.
His organization will conduct a review to understand the process of radicalization through social media and other Internet sources.
Self-radicalization through the Internet has been a growing concern for security officials and the notion was front and centre earlier this spring with reports that two young Canadians were involved in a deadly January attack on a natural gas plant in Algeria.
In the wake of those reports, critics said the federal government wasn't doing enough to understand how young people cross the line from legitimate dissent to violence.
Toews says terrorism and violent extremism pose real threats and as threats evolve, the government must improve its ability to better prevent and disrupt attacks.
Another project looks at how religious organizations can unite to foster healthy interfaith relations and build resilience against terrorism.
The funding comes from the Kanishka Project, a multi-year program named after the Air India plane which was downed by a bomb on June 23, 1985, killing 329 people.