Rowan Glen makes about 20 million pots and bottles of dairy products from its base near Newton Stewart.
All the milk it uses is sourced from farms in Dumfries and Galloway.
The business was resurrected by a small team of nine after its closure in 2022 and it has built its operations back up since then.
The latest investment - due to be completed by March next year - will upgrade key areas of the factory, improve its layout and install new production equipment.
Managing director Alan Baxter, who led the buyout, said the upgrades will allow greater flexibility in the products being made, and also introduce the ability to make cottage cheese.Baxter said there had been a real danger the business could disappear for good but the latest investment was a "massive step" for the firm which has built back up to about 30 staff.
He said: "I think it's really positive, it really secures the current jobs that we have, producing our yoghurt range and it creates some new jobs to produce cottage cheese.
“The size of that is a wee bit unknown at this stage, but we've certainly got a lot of interest in the cottage cheese, so we're keen to get moving on it.It means a lot of hard work, I'm not going to lie, but we enjoy that and we're going to look forward to improving the company.”
He said the buyout had given the firm a "stable platform" which it could build on with benefits for the wider area.
"We're using a lot of the local milk from surrounding farms, which definitely helps the farmers.