The Prime Minister is leading a delegation marking 50 years of the nation's independence and free association with New Zealand.
John Key said it was fitting to mark the occasion with an enduring gift.
New Zealand's contribution will help to rebuild Tereora College, which is the Cook Islands' greatest education infrastructure priority.
The $11.7 million will help fund the first phase design of the redevelopment of the college, which includes the design and construction of an administration centre, library and technology block.
"Schools are both a cornerstone of the community and places of learning which help prepare our young people for the future," Mr Key said.
"It is these students who will form the next generation of leaders and who will build on the relationship our countries have forged over the past 100 years."
Mr Key met his Cook Islands counterpart Henry Puna on arrival in Rarotonga today and will attend official Constitution Day celebrations tomorrow.
"Thousands of Cook Islanders are expected to turn out to celebrate the occasion and it is a great privilege to be here to mark it with them," Mr Key said.
The independence celebrations come only two months after the Cook Islands was forced to choose between a bid for a UN seat and a continued close relationship with New Zealand.
However, the issue has been put on hold during the celebrations.
Mr Puna said they did not want to interrupt celebrations, and the issue would be brought up again at a later time.
Mr Key said the topic might come up another time, but New Zealand has already made its position clear.
