Secretary of State for Transport Patrick McLoughlin cut the first turf to mark the beginning of works on the £27 million Camborne, Pool and Redruth link road.
On his visit to the region this week, the minister also confirmed government backing for a new £1.44 million railway station in Exeter. The Department for Transport will pay for around half of the scheme, with the balance funded locally.
The CPR link road scheme's development costs is also supported by funding from the European Regional Development Fund via Cornwall's Convergence programme.
Cornwall Council's interim corporate director for environment, Peter Marsh, said: "This is a vital scheme for Cornwall which will help drive forward the regeneration of the Camborne Pool Redruth area and assist economic growth."
The works will be carried out by Carillion and are expected to be "substantially completed" by the end of 2014.
It has been estimated that the road could stimulate the creation of 6,000 jobs over the next 20 years by opening up access to commercial zones in the area.
Mr McLoughlin said: "By investing in infrastructure like the Camborne and Pool link road, we can make a difference to people's lives and give our regional economies a real boost."