The World Bank is to help Tuvalu rebuild its financial reserves and provide more effective health and education services.
The Bank says high vulnerability to external economic shocks, drought and natural disasters have contributed to greater hardship in recent years, especially in the outer islands.
The global financial crisis in 2009 hit the country hard, with remittances, mostly from seamen working on foreign vessels, more than halved by 2012.
Returns on the Tuvalu Trust Fund also fell sharply.
The Bank's Pacific country director, Franz Drees-Gross, says the support aims to strengthen fiscal sustainability and deliver quality health and education services.
It will also include more investment in primary and secondary education, as well as basic and preventative healthcare.