Cardiovascular disease and diabetes will both be targeted, with $10 million funding allocated to each for new research centres.
The money comes from the Medical Research Future Fund's Targeted Translation Research Accelerator.
A further $1.76 million has been allocated to industry-led fellowships for researchers and clinicians.
Health Minister Greg Hunt said it would translate into superior research for prevention, diagnosis and treatments.
"Both national research centres are uniquely placed to foster collaborations across academia, industry, and community and consumer groups, enabling considerable advances towards tangible products and solutions for sustainable health and economic benefits," he said.
"(The) investments will help take their innovations from bench to bedside and ensure that their research is pursued, to make a real difference to people's lives while also boosting our economy and creating jobs."
Mr Hunt said the Australian Stroke and Heart Research Accelerator would focus on clinical impact and entrepreneurship, while the Australian Centre for Accelerating Diabetes Innovations would target debilitating complications.
The fellowships will support researchers, clinicians and professionals working in medical technologies, biotechnologies and pharmaceuticals.
They will work on priority projects such as precision cancer diagnostics and antibiotics targeting drug-resistant 'superbugs'.
Co-contributions from the sector will support the investment, with more than $11 million in cash and $23 million of in-kind support pledged.
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