Canada will spend $3.8 billion over six years to modernise its continental defense as part of its alliance with the US through the North American Aerospace Defense Command (NORAD).
Addressing reporters at a military base on Monday, Defence Minister Anita Anand said the upgrade is "to protect Canadians from new and emerging threats", reports Xinhua news agency.
"The threat environment has changed. As our threats evolve, so must our defensive capabilities. What we aim to do with this announcement today is to ensure that we, across the board, are engaging in the most significant and relevant upgrade to Canadian NORAD capabilities in almost four decades."
As part of the upgrade, Canada will build a new radar-warning system to detect "who and what is entering Canadian aerospace from the North", reports Xinhua news agency.
Canada will also establish a "Crossbow" system across the country to detect incoming threats, and acquire advanced air-to-air missiles that can engage threats from short, medium and long ranges.
A space-based surveillance system that can detect threats from around the world is included in the NORAD overhaul as well.
The Canadian government will spend nearly $31 billion over the next two decades to bolster its continental and northern defense systems, according to Anand.
"NORAD has continually adapted and evolved in response to new threats. Today we turn another page and begin NORAD's next chapter," she added.
Founded in 1958, the NORAD is a combined organisation that conducts aerospace warning, aerospace control and maritime warning for Canada and the continental US.