In what it said was the largest ever international commitment to the issue, Britain's international development ministry said the programme should reduce genital cutting by 30 percent in 10 African countries over five years as well as support work further afield.
"It is time to break the taboo on genital mutilation," said junior development minister Lynne Featherstone, announcing the aid at the United Nations Commission on the Status of Women in New York.
"For too long the international community has been cowardly on this subject, finding it too difficult to tackle."
"Girls around the world have suffered a lifetime of damage, sometimes even death, as a result."
Female genital mutilation is widely practised in east and west Africa as well as parts of Asia and the Middle East.
It also takes place among immigrant communities in Western countries where it is outlawed, including Britain, France, Canada and the United States, where it is illegal in cases involving girls under the age of 18.
The World Health Organisation estimates that 140 million women and girls worldwide are living with the consequences of the cultural practice, which can cause severe bleeding and problems urinating, as well as complications in childbirth.
It is mostly carried out on young girls between infancy and the age of 15.
The UN General Assembly passed a resolution last December banning female genital mutilation.
Britain said its aid programme would build on this momentum, working with governments to back laws banning the practice as well as working with local communities to change cultural norms.
"Female genital cutting is one of the worst kinds of gender violence," said Featherstone.
"We know most families want the best for their children and education, and changing cultural norms, rather than merely condemnation, is key."