Cookstown based firm Lagan Engineering to to create 16 new jobs.
Invest Northern Ireland has offered the company assistance of £134,250.
The firm designs and manufactures custom-built products for the sand, quarry, waste and recycling industries.
Enterprise, Trade and Investment Minister Jonathan Bell welcomed the announcement.
He said: "This bold investment by Lagan Engineering Limited, supported by Invest Northern Ireland, will enable the company to consolidate its success to date and strengthen its long-term viability.
"The new jobs will contribute £345,000 annually to the local economy and expand the manufacturing skills base in the Tyrone area. They include key management posts that will help guide the company as it moves to the next level.
"Growing and strengthening our indigenous manufacturing businesses is a priority for my department and for Invest NI. Manufacturing businesses account for 16 per cent of all local economic output and for one in every nine local jobs."
Brian Lagan, Managing Director of Lagan Engineering Limited, said: "This investment will allow us to expand and diversify over the next two years. With new workspace and an operations manager, a design engineer and a quality manager in place, we are confident that we can achieve significant turnover growth and increase our level of exports."
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