The donation was announced by the University of Toronto as part of the recognition and celebration of National Aboriginal Day on Saturday.
Dr. Michael Dan and his wife Amira Dan gave the money to the Dalla Lana School of Public Health for the creation of an institute that will research and come up with solutions to health issues within the aboriginal population.
"I am excited and honoured to take part in an initiative that will improve the health and well-being of one of Canada's most marginalized peoples," said Dan in a release.
"The institute will be based at Canada's leading university and will provide innovative solutions designed to narrow the much too large gap between the health status of indigenous and non-indigenous populations."
The proceeds stem from the sale of Novopharm Ltd., a generic drug company founded by Dan’s father, Leslie.
The university says an advisory committee will be assembled to ensure that key voices from across the indigenous community are involved.
"The actual creation of an institute that merges traditional and contemporary experience in health is a truly exciting development for Indigenous peoples the world over," said Elder Fred Kelly, a member of the Ojibways of Onigaming and a citizen of the Anishinaabe Nation. "It is noble in vision and bold in mission. Its spirit of innovativeness is a dream coming true."