The contract, awarded by Highland Council, will see Robertson Northern build 31 new apartments at the former Inverness College site.
The works at the Midmills site are due to start in November 2017 and are expected to be complete by December 2018.
Frank Reid, managing director at Robertson Northern, said: “This development will breathe new life into the former college grounds and help meet the need for more affordable homes in Inverness.
“The planned works will help transform the existing space into a thriving community area with beautiful homes and great communal spaces. The extensive works planned for the wider Midmills site will help to reinvigorate this historic and desirable area of Inverness.”
Provost of Inverness and Area, Highland Councillor Helen Carmichael, said: “The new apartments at Midmills Campus will be a great addition to the range of housing we are able to offer to people in Inverness and the surrounding areas.
“This particular development of 31 properties for rent by the Highland Council will be available for people aged 55 or older. Housing is a huge priority in the region and is a key priority in the council’s programme. This excellent development is providing much needed homes in Inverness that are responsive to local needs.”