The move represents the first permanent production studio outside of the USA for Netflix.
Ottawa's five-year, $500-million Canadian content deal with Netflix drew swift reaction from the nation's incumbent television content creators for the relatively low financial commitment.
"It is important for us to see and hear stories that reflect back to us who we are as we are learning about our place in the world", Joly said in a speech. This has raised concerns over the loss of Canadian content, worries over how to compete with streaming services and calls for streaming taxes - with the proceeds going to fund Canadian programming.
However, many producers claim the deal unfairly advantages Netflix, which will pay no taxes for the duration of the agreement and is not subject to the existing 5% content levy.More news: Prince Harry makes first public appearance with girlfriend
The government's deal with Netflix under the Investment Act allows it to claim a victory for Canadian content while also avoiding imposing new regulations on Internet companies.
This will be known as Netflix Canada, a "first of its kind production company".
Other commentators have pointed out Netflix has previously claimed to spend "hundreds of millions" of Canadian dollars on local productions.More news: Global airports hit by computer system crash
Joly announced that $125 million has been earmarked over five years to support a creative export strategy that includes the new Creative Export Fund, which will be launched in 2018 with the aim of helping cultural producers increase their presence outside the country.
Government officials want to encourage, promote and showcase content that's ideated and produced in Canada while broadcasting it to the world.
As part of a swath of new cultural policies, Joly also announced new "cultural trade missions" overseas to help Canadian creators break into new markets.
Netflix's investment will not only help television shows and film productions, but various music producers and digital content as well.More news: Ringgit lower against United States dollar in early trade