The facility will maintain the new trains that TransPennine is to introduce, including fuelling for trains on the route between Scarborough and Liverpool Lime Street
Construction for the new depot is expected to be completed by next summer.
The move comes as TransPennine prepares to significantly improve the quality of its stock with 13, brand new five carriage trains running between Scarborough, York, Leeds, Huddersfield, Manchester and Liverpool from late 2018.
The operator said these longer trains and upcoming timetable enhancements will mean 700,000 extra seats per year for those travelling to and from Scarborough.
New early morning departures and more services later in the day are planned as part of the upgrade.
Nick Sworowski, depots and infrastructure project manager for TransPennine Express, said: “This major investment will enable our brand new trains to operate from and be maintained in Scarborough.
“We considered a number of sites across the wider Yorkshire area and Scarborough provides a geographically strategic site for this essential maintenance work.
“This is a long term investment in the town and we are pleased to be bringing jobs to the area.”
Councillor Joe Plant, portfolio holder for strategic planning and transformation on Scarborough Borough Council, said: “This is great news for Scarborough and we welcome this investment.
“It will deliver skilled jobs into Scarborough and, along with new modern state of the art trains and improved timetabling, will make a significant improvement to connectivity to and from Scarborough for residents, visitors and business users.”
Enhancements to the track itself are also being made as part of the work including the laying of one mile of brand new rails.
Construction work is expected to commence early in the New Year and local suppliers from the Scarborough and North Yorkshire supply chain will be used where possible.
David Dickson, chairman of the York, North Yorkshire and East Riding Enterprise Partnership’s Infrastructure Board, said: “The new jobs and investment in the depot at Scarborough are a very welcome addition to the significant upgrades that TransPennine Express is making to the capacity and quality of trains connecting Scarborough to York, Leeds and beyond.”
Councillor Don Mackenzie, Executive Member for Rail for North Yorkshire, said: “Through our membership of Rail North, North Yorkshire County Council has been encouraging the rail industry and train operators to invest in the county’s rail infrastructure, to improve station facilities and to enhance the travelling experience for our residents.
“We welcome the additional services for Scarborough.
“The £7m investment by TPE in a new service depot for the town and the jobs associated with it are particularly good news.”
Last month TransPennine Express and Siemens won a Golden Spanner Award for the Class 185 fleet of trains.