Blackbird Infrastructure has signed a deal with the government to design, build, finance and maintain the final phase of the project.
The province will set, regulate and collect tolls, which it says will be lower than on the privately owned 407 ETR, and the funds will be used for infrastructure and transit.
Construction is set to start this fall and is scheduled to be completed in 2020, with the first section set to open in December 2017.
The project extends Highway 407 from Oshawa to Highway 35/115, which connects to the Kawartha Lakes and Peterborough areas, and will also link to Highway 401 just east of Oshawa.
The first phase of Highway 407 East that runs from the end of the privately owned 407 ETR at Brock Road near Pickering to Harmony Road in Oshawa is set to open by the end of this year.