The investment will include upgrades to the sawmill, increased kiln drying capacity and construction of a planer mill complex.
The company said work will start in the first quarter of next year and is expected to be complete in the third quarter.
Canfor bought the Elko sawmill and another in Canal Flats in a $60-million deal for Quebec-based forestry company Tembec's assets in B.C.'s Southern Interior.
The deal for the two mills was announced last year and closed in March.
Canfor is one of the country's largest lumber producers with operations in B.C., Alberta, Quebec and the United States.