Preparatory work has begun on a new science park building at Letterkenny Institute of Technology.
The €4.5m project is part a cross-border plan to develop science, research and innovation in the northwest.
A similar facility is being built in Derry.
Minister for Jobs, Enterprise and Innovation Richard Bruton said the project will result in the creation of more than 60 high-end jobs.
The construction phase of the extension to the CoLab at LYIT will result in 55 jobs being created.
It is expected to be completed by mid-2015.
The CoLab currently houses 28 small companies, employing more than 110 graduate-level employees.
It is intended that the extension will provide 13 new business spaces and significant research space.
Mr Bruton said it is hoped to develop three cross-border clusters involving Enterprise Ireland and Invest Northern Ireland.
He also hopes the facility will help secure one additional Foreign Direct Investment project into the northwest each year.