The Blackburn Diocese said the grant from the national church would fund a programme of renewal over nine years and create 50 new jobs, including a team of 30 dedicated reaching young people.
The church said the new "Ignite Team" would work across Lancashire to reach young people and increase the numbers attending church regularly.
Rt Rev Philip North, Bishop of Blackburn, said the funding would make a "massive difference to our common life".
'Culturally diverse' church
The church will also seek to appoint a Canon for presence and engagement, to be based in Blackburn Cathedral, along with an inter-cultural mission enabler in Burnley, with an aim to increasing diversity.
"It may just be youth drop ins, and places where any young people can come along," Bishop North said.
"It may also be a place where young people can come along and explore the purposes of their lives and explore what it means to be a Christian.
The investment was announced on Thursday by the CofE’s Strategic Mission and Ministry Investment Board (SMMIB).
The board said the funding would bring the diocese closer to its aim of having "healthy churches transforming communities across the county".
It will support the continuing growth of the church across Lancashire while simultaneously shaping a younger, more socio-economically and culturally diverse church.
The SMMIB has backed plans for a £25.5m investment for a programme of renewal in the Diocese over nine years, with £12m in the first phase and £13.5m (agreed in principle) for two more stages of work and subject to evaluation of progress.
Bishop North said the new funding from the national church would make a "massive difference to our common life" across the county but "also comes with a challenge".
“In the past few years in the diocese we have set a bold path for ourselves. We do this because we long for people across our county to find life in relationship with Jesus," he said.