40 new jobs are to be created at Largo Food Exports Ltd in Gweedore.
The company currently employs some 184 people on the Gweedore Business Park.
The Largo Group companies produce snack-foods at their bases in Ashbourne and in Gweedore and have provided steady employment in the Donegal Gaeltacht for many years.
The company plans to develop a new snack product at the site.
Northwest MEP, Pat the Cope Gallagher has welcomed the annoucment.