It follows years of planning by local groups and parks officials.
"The long-term objective for the project is to have a self-sustaining bison herd that supports ecological integrity, enriches visitor experience, creates culture connections and provides learning and stewardship opportunities," said area MP Blake Richards during the announcement.
The federal government says plains bison once played a key role in the park's montane ecosystem, but has been absent from the park since its establishment.
"Successfully restoring this keystone species in Banff will allow visitors, neighbours and the public at large to experience an authentic national park experience," said Richards in a release.
Parks Canada says it will invite First Nations to share traditional knowledge of plains bison, and participate in stewardship, management and celebrations. Students and volunteers will also be engaged to participate in bison research, monitoring and stewardship activities.
The project will cost roughly $6.4 million. The investment is designed to support Canada's National Conservation Plan.