Transport Minister Lisa Raitt says Ottawa is also funding up to $9 million for repairs to the Canso Causeway and the swing bridge.
The Nova Scotia government says the work, which includes upgrades to mechanical, electrical and structural components of the swing bridge, will extend its life by 25 years.
Ottawa says it will continue to own and maintain the canal and navigational locks.
The 1.5-kilometre causeway was opened by the federal government in 1955 and serves as the only land transportation link between the mainland and Cape Breton island.
It spans the Strait of Canso and is the deepest rock-filled causeway in the world at 65 metres.