The monument will be located near downtown Ottawa, just down the road from Parliament Hill and across the street from the National War Museum, where the announcement was made.
Tim Uppal, the minister of state for democratic reform, calls the memorial a testament to the importance of preserving the memory of the Holocaust.
"This central location will attract a large number of visitors. It will encourage people to reflect upon the events of the Holocaust, remember the victims, and pay tribute to the survivors," Uppal said.
"It will also encourage people to reflect on the responsibilities each of us has to protect human rights and dignities."
Immigration Minister Jason Kenney was also on hand for the announcement.
"The Holocaust stands alone in the annals of human history for its systematic cruelty and for the brutal murder of six million innocent Jewish men, women and children," Kenney said.
"It is essential that we never forget the lessons of the past and continue to educate future generations about the unique horror of the Holocaust. This important monument is one way that we can do so."
"The National Holocaust Monument Development Council has undertaken the important task of ensuring that this monument be built," said council chairman Rabbi Dan Friedman.
"There is a clear understanding that this monument is a testament to every Canadian who believes in standing up for tolerance and human rights."
No details about the design of the monument, which is scheduled to be completed by 2015, have been released.
Canada is committed to Holocaust remembrance, education and research, said Kenney, noting that former Liberal MP Mario Silva is chairman of the International Holocaust Remembrance Alliance in 2013-14.
The alliance is an intergovernmental body made up of government officials and experts from 31 countries that's devoted to fostering and promoting Holocaust education, remembrance and research around the world.
"Canada will work with all alliance member countries to implement an ambitious, multi-year work plan that includes research into Holocaust killing sites outside of major death camps, the development of educational resources for teachers, and strengthened relationships with international partners," Silva said last month.