The Danish government grant will see over 4.4 million trees planted in northern Uganda and parts of the Sudan-Uganda border, particularly in the West Nile region.
Karina Hedemark, Danish programme co-ordinator at the embassy in Kampala, said the region was picked because it suffered 19 years of neglect during the Lord's Resistance Army rebellion.
She added that by engaging local communities in tree planting, the project, dubbed Tree Talk Plus - Greening Uganda, will also empower them economically.
"By building on the strong infrastructure and network of the project so far in these areas, the initiative will change knowledge, attitudes and practices surrounding tree growing," said Ms Hedemark.
That the grant came when the world was meeting in the Danish capital, Copenhagen for the United Nation's Climate Summit, reinforces Denmark's concern on global warming.
Country representatives attended the climate conference that ended last week, to accept payment of reparation by developed countries to poor nations.
"Climate change awareness and action should reach people whose livelihoods are at risk of facing the worst effects of a changing climate...I am proud to support this project that combines mass media base awareness with concrete activities as tree planting, for the benefit of people living in northern Uganda, where nature conservation suffered during the conflict," said Danish Ambassador to Uganda, Nathalia Feinberg.
The project will also involve the training of some 2,600 local people on conservation, environment and climate change, as well as strengthen protected areas and natural resource management in five districts of northern Uganda.
This and another project to restore agricultural productivity in northern Uganda have been in place since 2006, when the region's security begun to show signs of improvement, running parallel to those of other key donor agencies like the European Union, Sweden, Ireland and Norway, as well as those supported by UN agencies.
In 2002, Denmark in collaboration with the government of Uganda and two local organisations embarked on improving agricultural productivity through the "voucher for work" system.
In this programme, internally displaced persons receive farm inputs in exchange for work such as development of local infrastructure projects like rural access roads.
The displaced persons work under the supervision of technical staff, who also take care of the input delivery chain, overall administration and provide extension services, as well as funding.