Federal and Quebec taxpayers will contribute $21.4 million for a brain-imaging centre at the Douglas Institute in Verdun.
The centre is scheduled to be completed next year.
Quebec Health Minister Yves Bolduc announced the start of construction during a news conference at the hospital on Friday morning.
"Brain imaging techniques play a role of growing importance in the fields of neurosciences and psychiatry," said the minister.
"(Imaging) sheds new light on … causes of mental illness."
The 1,200-square-metre complex will feature two magnetic resonance imaging (MRI) units. They'll be used to better diagnose abnormalities in patients, including those with Alzheimer's, schizophrenia, depression and autism.
There will also be other high-tech devices at the centre including brain-stimulation hardware.
The Douglas hospital currently uses facilities at the Montreal Neurological Institute.
Quebec taxpayers are contributing about $15.5 million of the construction costs while the federal share of the price tag is $5.9 million.