The 18 month contract will see MITIE install Eco measures for council tenants and private households.
Under the deal, MITIE will also be responsible for the delivery of a district heating scheme for the Thornhill Estate, which will involve more than 1,100 properties.
Ruby McGregor-Smith, chief executive of MITIE, said: “This new partnership with Southampton City Council will help reduce fuel bills and carbon emissions across their entire housing estate.
“We are really excited to be building on our existing relationship with the Council and look forward to providing residents with warmer and more energy efficient homes.”
Nick Cross, head of housing services at Southampton City Council, said: “Eco funding will significantly improve the standard of the Council’s poorest performing housing stock as well as reducing fuel poverty and improving the health and well-being of tenants in some of the most deprived areas in the South.”