The government's contribution to the stadium's redevelopment will help to enhance the roof to provide greater shelter and improve dining and toilet facilities.
It will also build a new convention centre and western grandstand upgrade, improve stadium entrances, build new corporate suites and expand administration offices.
Premier Mike Rann said the government was supporting the redevelopment because it was the only venue in the state that could seat more than 50,000 for a range of sporting and major events.
"This redevelopment will bring AAMI Stadium up to international standard," he said in a statement.
"It will not only enhance the experience for spectators and users of AAMI Stadium, it will put us in a stronger position to compete for major events such as World Cup soccer matches."
State treasurer Kevin Foley said it was the view of the SANFL, the AFL and both the AFL clubs that "a redevelopment of AAMI Stadium is the best result for football in South Australia".
SANFL chief executive Leigh Whicker welcomed the announcement.
"This redevelopment is indeed the logical solution for providing the South Australian community with a symbolic, world class sports and entertainment stadium," he said in the statement.
Recreation and Sport Minister Michael Wright said the state government was also supporting Port Adelaide and the Crows by matching a commonwealth commitment of $2.5 million to each club.
"AAMI Stadium draws over one million spectators every year and most of those are Port Adelaide or Crows supporters," he said in the government statement.
"It makes sense for us to support the teams who attract the majority of patrons through the gates."
