The announcement is the result of a partnership between the AFL, the Australian Federal Government and the Western Australian Football Commission.
Federal Minister for Indigenous Affairs Jenny Macklin on Wednesday said the funding would attract people to footy.
"It will be used to help people become umpires, team managers, coaches, sports administrators in the region," Ms Macklin said.
"There's actually money that is going to be used for employing specific people to do training in Kununurra and in Broome."
Making the announcement alongside Hawthorn's indigenous star Lance Franklin, Ms Macklin said football was the sport of choice in communities around the country.
"We know there are many thousands of indigenous children and young people playing Australian Rules right across Australia," she said.
"What we want to do is make sure those youngsters in the Kimberley get the chance to train and develop as footballers as Lance had the chance to do."
Franklin welcomed the news of the funding announcement.
"Being an indigenous person, the money from the government is going to mean a lot to the indigenous guys. It will give them an opportunity to get an education and a healthy lifestyle," he said.
