The company said that 100 jobs would be created in Scotland under the five-year plan.
A new distillery will be built in Speyside or the Highlands while extra warehousing capacity will also be constructed, Diageo said.
There is also potential for a second new distillery, depending on the development of the market.
Chief executive Paul Walsh hailed the strength of Scotch whisky brands including Johnnie Walker. He said that annual sales were approaching £3.6bn and that new markets across the globe were opening up.
He said: “There are an increasing number of middle class people in emerging markets with the wherewithal to buy our products.”
Diageo derives a third of its profit from Scotch whisky and Walsh added: “This investment underpins our confidence in Scotch whisky.”
He said East Asia, Africa and Latin American markets were developing rapidly, while in Europe, France was still strong.