Work will begin on its existing Blandford St Mary site in October.
A spokeswoman said the new brewery will be dedicated to brewing Badger ales.
“The beers will still be brewed using the same quality brewing ingredients, including Dorset spring water, to ensure the flavours and character of Badger ales remain the same,” she said.
Mark Woodhouse, vice-chairman, said “Hall & Woodhouse has been brewing Badger ales for over 225 years and this exciting new development ensures we will be doing so for many more generations to come.
“I believe an investment of this magnitude also demonstrates our ongoing commitment to brewing and to the continued growth of our premium bottled ales.”