Predator Free Dunedin project manager Rhys Millar said the project was ''mightily ambitious''.
''We believe it's achievable.''
The Government money would be spend on traps and the employment of contractors and co-ordinators.
In the next five years the project also hoped to engage urban residents, eventually getting them involved in the processes for rat control.
Seeing kaka, hoiho (yellow-eyed penguins) and South Island robins dispersing throughout Dunedin would be a sign of success, he said.
Ms Sage said the project would build on Dunedin's conservation history.
''Dunedin has long had the reputation of being the wildlife capital and this will increase that. It's very ambitious.''
The Government was committed to investing in conservation because nature was at the heart the country's success.
''We have a predator crisis here in Aotearoa with 4000 species threatened.''
There was increasing support for the Predator Free 2050 project, and thousands of New Zealanders were putting traps in their backyards.
Predator Free 2050 science strategy project manager Dan Thompkins said the overall project was a reaction to the realisation despite all the conservation efforts in New Zealand the country was still losing its birds.
''We really need a step up in what we do.''
Dunedin was chosen for funding because it already had established groups doing great work and had ''unique geography'' with urban areas, dense bush and the peninsula.
Kaka could be seen in the Octagon within a decade, he said.
Much past conservation work targeted the back-country, but the Government wanted to bring efforts to urban areas.
Other funders include the Otago Regional Council, which has pledged $1.5 million through its Regional Pest Management Plan, and the Dunedin City Council, which is contributing $850,000 in funds and using another $1 million to use predator management funding towards Predator Free Dunedin goals.
Ospri is helping with its $3million possum-eradication programme and other funding comes from Maanaki Whenua, the University of Otago, Landscape Connections Trust and the Otago Peninsula Biodiversity Trust.
Predator Free Dunedin was short $440,000 for the overall project in its past two years.