Councils across South Yorkshire, along with Sheffield Hallam and York St John universities, secured £180, 695 from the Ministry of Defence's Covenant Fund.
The money will be spent on research projects and training schemes at both universities to look at how the region can better support both serving and retired armed services personnel.
The scheme will be officially launched to coincide with Armed Forces Day in June.
Councillor Tony Damms, Sheffield Council’s armed forces champion, said “We are thrilled with this achievement.
“We are working hard to improve support to the local armed forces community and this achievement is another step forward for us as a city and as a region.
“This is collaborative working in action and will lead to better and consistent support for the armed forces community across South Yorkshire.”
Project leaders said the key aim is to 'encourage the integration of service life and civilian life.'
They have not yet revealed specifically how the scheme will take shape but it will look at a wide range of areas, such as how to better support people who care for injured veterans and how to help those leaving the armed forces to get into new employment.
Coun Taiba Yasseen, Rotherham Council’s cabinet member for neighbourhood working and cultural services, added: “This funding is great news and will make a welcome contribution to our partnership work across the region, to help support the armed forces community. In Rotherham we recognise and value the significant contributions our armed forces personnel make whether serving or retired.”