The money will be spent on designing systems to allow the chassis of future models to be made out of aluminium.
The first of these models will be a new mid-sized sports saloon car to be introduced in 2015.
The announcement was made at the Frankfurt motor show by JLR chief executive Ralf Speth.
"Today's announcement signals Jaguar Land Rover's ambitions to push the boundaries and redefine premium car ownership," he said.
"Jaguar Land Rover is a business driven by design, technology and innovation and this investment and level of job creation is yet further evidence of our commitment to advancing the capability of the UK automotive sector and its supply chain."
The design teams will be creating what they call an aluminium architecture, which is the part of the car on which the bodywork, seats and engine sit.
The idea is that it will be flexible enough to be the base for future model of either Jaguar or Land Rover cars.
In pictures: Jaguar C-X17
Carmakers are increasingly using aluminium in their vehicles because its light weight improves fuel efficiency.
The first car using the aluminium platform will be a smaller than other Jaguar models.
But in order to demonstrate the flexibility of the system, JLR has also unveiled a concept car called the C-X17, which is halfway between a sports car and an SUV, and could also be based on the new chassis.
JLR said that the jobs at the Solihull site would bring the total number of jobs it had created in the UK over the last three years to almost 11,000.
It also stressed that the investment would involve significant extra spending with its suppliers.
JLR has been owned by India's Tata Motors since 2008.

Jones, of Colwyn Bay, Conwy, announced last month that he has a severe type of dementia.
Fellow Python star Michael Palin paid tribute to his "most wonderful friend" before presenting him with the award.
Jones told the crowd to "quieten down" before his son told the crowd it was a "great honour".
Accepting the accolade on his father's behalf, a tearful Bill Jones told the audience in Cardiff: "It's a great honour for dad. We're so proud of him... with the struggles we're having at the moment, it's been hard."
Earlier in the evening, Hollywood actor Leonardo DiCaprio paid tribute in a video message to Oscar-nominated make-up artist Sian Grigg, who won the Sian Phillips award.
It is given to someone who has made a significant contribution to international feature films or network television.
Mali Harries took the best actress prize for her performance as Det Insp Mared Rhys in detective series Hinterland/YGwyll, which also won best television drama.
Mark Lewis Jones won the best actor award for the film Yr Ymadawiad, which tells story of two young lovers who are saved by a man after crashing their car into a ravine in the remote mountains of Wales.
Hinterland/Y Gwyll producer-writer Ed Talfan also won the writer award for the film.
Mr Calzaghe, a documentary film about the career of Welsh boxer Joe Calzaghe, won three awards, including special achievement in a feature/television film and best factual director for Vaughan Sivell.
Will Millard, won the presenters award for Hunters of the South Seas, which explores the lives of people of the Coral Triangle in the Western Pacific, while Newyddion 9, a BBC Wales production for S4C, won best news coverage for its programme Argyfwng y Mudwyr about the European migrant crisis.
Music for Misfits: The Story of Indie, which documents the development of British indie music, won the factual series prize.
The award for live outside broadcast went to S4C's Cor Cymru - Y Rownd Derfynol - coverage of the Welsh choir final.
Those attending the event, which honours the achievements of Welsh television and film makers, included Gotham star Erin Richards, Torchwood and Victoria actress Eve Miles and comedian Elis James.
Jaguar Land Rover (JLR) plans to create 1,700 jobs at its plant in Solihull as part of a £1.5bn investment in expanding its product range.
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Monty Python's Terry Jones has received a standing ovation at the Bafta Cymru awards for his outstanding contribution to television and film.