The company said it has secured backing from new owner Comcast to launch Sky Studios, a new Europe-wide development and production division.
Read more: Channel 4 grows revenue as it doubles down on digital Sky currently spends roughly £500m each year on its own programmes, but said it plans to double this investment over the next five years.
Sky also won two Baftas for Patrick Melrose, which starred Benedict Cumberbatch, and has gained critical acclaim for European series such as Gomorrah.
“This is a transformational development for us,” said Sky group chief executive Jeremy Darroch.
“Sky Studios will drive our vision to be the leading force in European content development and production. Our ambition is to make Sky Studios famous for quality content and a place where Europe’s top creatives will want to do their best work.”
Sky, which owns streaming service Now TV, will be hoping the investment can help it take on its larger rival Netflix.
But with the US streaming giant expected to spend $15bn on content this year, Sky remains a long way behind its deep-pocketed competitor.
“Sky could not have picked a better time to announce this, following the incredible success of Chernobyl,” said Dani Warner, broadband and TV expert at uSwitch.
Read more: Netflix raises prices by 20 per cent as it blames $15bn production budget
“In content terms, this is the first real show of muscle from new owners Comcast. Premium content both drives conversation and hype, and is popular with viewers – but it doesn’t come cheap.”
Sky Studios will be led by Gary Davey, who is currently the firm’s UK managing director of content. The new divisions will create productions for Sky channels, Comcast firms NBS and Universal, and other distribution outlets.