The state of Illinois will put $10 million toward beginning work to connect Interstate 72 and U.S. 51 near Decatur.
The Macon County South East Beltway will cost about $150 million and move traffic that passes through Decatur around the city's east side.
The 22-mile highway will connect Interstate 72 east of Decatur with the expanded four-lane U.S. 51 south of the city at Elwin.
The money comes from the Illinois Jobs Now capital construction program. Gov. Pat Quinn announced the project Thursday.
It will be used for final planning, utility-line relocation and right of way acquisition for interchanges at Illinois 36 and at Elwin.
Officials say the bypass will improve access to Decatur Airport and eastside industries and reduce heavy truck traffic on city streets.