The 398MW tidal power project has secured funds of approximately £50m for the first phase. The UK government has granted £10m for this phase.
The Crown Estate has invested another £10m; and the Scottish Government and Highlands and Islands Enterprise will invest £20m.
Meygen project will have around 269 turbines submerged on the seabed and will produce electricity for 175,000 homes.
Four turbines will be installed in the first phase over the next two years; by 2020, about 61 turbines will be installed, which can generate electricity for 42,000 homes.
UK Energy Secretary Ed Davey said: "This innovative and exciting project puts Scotland and the UK on the map as a global leader in marine technology – meaning jobs, better energy security and the potential to export this technology to the world.
"The project also shows what can be done when the UK and Scottish Governments work together to provide a lasting benefit for the people of Scotland."
Scottish Energy Minister Fergus Ewing said: ""The Pentland Firth development takes our ambition to the next level and further cements Scotland’s reputation as a world leader in deploying renewables technology."
Crown Estate energy and infrastructure director Rob Hastings said: "This is part of our strategy to explore the potential of tidal stream energy on a commercial scale with a project that offers a crucial stepping stone on the path towards unlocking the nation’s tidal energy potential over the long term."
The project can provide job opportunities to more than 100 people.
