Under the funding arrangement, $12 million will help fund the construction of a building to house the new school while $4 million will go toward the program's operating costs.
Construction of the new building is set to start next week and is expected to be completed by the fall of 2016.
The new program will focus on mechatronics, bioresources and sustainable energy engineering.
The government says the aim is to align the school with the needs of industrial sectors already established on the Island such as aerospace and bioscience.
Allen Roach, the province's innovation and advanced learning minister, says the initiative is aimed at making the university more competitive and attracting new students.