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The £18m scheme was unveiled to the local council officials last month.
Works will include the upgrade of Cookstown and Pomeroy Wastewater Treatment Works, watermains rehabilitation and the upgrade of a storm sewer to serve a new housing development in the Chapel Street area.
Chris Mellor, NI Water's Chairman and Chief Executive, said: "This level of investment in Cookstown is part of our commitment to bring water and wastewater services in Northern Ireland up to the highest possible standard both in terms of quality and cost.
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"Our focus is very much on safeguarding public health and the environment and enhancing customer services.
Head of Customer Services Marie White added: "There is an urgent need to address the issues arising from the legacy of under-investment to enable us to match or exceed performance levels of similar UK water companies by 2015.
"For a number of reasons, money that should have been spent on water and sewerage down the years was not," she added.
By 2010 NI Water will have invested £492 million in wastewater treatment and collection systems and £174 million in water treatment and storage systems.
(PR/JM)
