The government is partnering with Waikato-Tainui to enable the construction of 100 affordable rental homes near Ngāruawāhia.
The government's $35 million investment will go towards the delivery of 57 homes, and enable the infrastructure for a further 43 at the Hopuhopu Housing Development.
Associate Housing Minister Tama Potaka said Waikato has the highest number of emergency housing use, and "nearby Hamilton has the third highest number of applicants on the Housing Register of any territorial authority."
The partnership showed how the government would work with iwi to address the housing shortage, Potaka added.
"The Hopuhopu Housing Development will help deliver better social and community outcomes for whānau who will live, work, and build cultural identity there".
The development will be on 170 hectares of land owned by Waikato-Tanui.
The land was initially confiscated by the Crown and a military camp had been set up from 1920 before it was returned to Waikato-Tainui in 1993 as part of the first land parcel given back under the Waikato Raupatu Lands Settlement.
Waikato-Tanui executive chair Tukoroirangi Morgan said the significance of the land to the iwi could not be understated.
Morgan said the homes would be for whānau with genuine housing need.
"For us, the Hopuhopu Development will enable Waikato-Tainui to realise aspirations for a unique, vibrant, interconnected working, living and learning community that inspires unity, collaboration and innovation.
"We want to drive social returns in a way that enables the investment capital to be recycled in perpetuity."
Construction contracts will be awarded by the end of the year, and it's expected iwi members will be involved in the construction process.
The government's $35m was from the Whai Kāinga Whai Oranga programme through Te Tūāpapa Kura Kāinga - the Ministry of Housing and Urban Development.