The development will upgrade the hotel to four-star status and provide 19 new bedrooms, conference facilities, a new reception hall and an extension to the restaurant.
Major landscaping works will be undertaken around the hotel and additional car parking will also be created.
Invest Northern Ireland has offered £480,000 towards the project, which will increase staff numbers to over 70.
Minister Foster said: "It is encouraging that international interest in Northern Ireland is high, with the past twelve months seeing significant progress in the number of visitors coming here."
"There has been an overall 28% increase in holiday visits, with particularly strong performances from Europe and the USA."
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"We must take full advantage of this, and cater for the needs of the growing volume of foreign visitors."
"With world-renowned golf courses and tourist attractions nearby, the Bushmills Inn Hotel will be well placed to capitalise on the demand for quality, four-star accommodation."
"The extensive improvements to the Bushmills Inn Hotel, and similar investments in our tourism sector, serve to showcase Northern Ireland as a world class location for tourists, and will ensure that future business opportunities can be fully exploited," added Ms Foster.
Managing Director of Bushmills Inn Hotel, Alan Dunlop, said: "Our success to date is reflected in the high level of repeat visits we regularly secure from overseas visitors, in particular the US golf market."
"It has become clear, however, that we can boost our ability to target larger roups, and greater overall numbers, in the lucrative activity, short break and conference markets by investing in our facilities and improving our existing classification to become the first four-star hotel on the Causeway Coast. "
"This is a significant investment programme and the associated building work will be completed in time for us to capitalise on opportunities during the peak 2009 season."
"The support of Invest NI has been invaluable, not only in bringing this project to fruition, but also with helping us to develop our overseas marketing capability," said Mr Dunlop.
(PR)
