Australia will start manufacturing long-range missiles from next year under a $37.4 million deal with Lockheed Martin Australia.
Acting Defence Minister Pat Conroy announced the contract to help the nation set up large scale domestic missile manufacturing.
"This important first step towards the establishment of domestic guided weapons manufacturing in Australia will complement the acquisition of long-range precision strike capabilities and strengthen the ADF's ability to protect Australia and its interests," he said on Tuesday.
The government will also acquire Precision Strike Missiles, which can hit targets out to 500 kilometres.
These are part of a $4.1 billion investment towards long-range strike missiles and guided weapons enterprise in response to the defence strategic review, released last year.
Deputy Prime Minister Richard Marles described the contract as demonstration Labor was delivering key outcomes from the major defence review.
"These are important milestones which will see Australia gain the technology we need to establish a sovereign industry, providing opportunities for a highly-skilled workforce," he said.
