The cash will cover the costs of college lecturers and instructors delivering vocational courses to S4-S6 pupils in care, engineering, hairdressing and rural skills.
Pupils on the courses will have two days of lessons by school staff, two days of vocational lessons and one day on work placements with local businesses.
John Aitken, the school's headteacher, said he made the initial approach to the Laidlaw Youth Project after difficulties were encountered over colleges being able to release staff to work in the school.
Lord Laidlaw of Rothiemay, although born and brought up in Keith, was educated at Merchiston Castle School in Edinburgh. His charitable foundation has made substantial funding available to help vulnerable youngsters make a successful transition to adulthood.
While there has been press speculation that Lord Laidlaw had chosen to shun Scottish state schools by sponsoring a city academy in Newcastle upon Tyne, sources suggest that his investment in Keith Grammar will be just the start of his interest north of the border. It is understood that Lord Laidlaw was already involved in discussions over the Newcastle investment before he became involved in talks with Scottish ministers.
Keith Grammar is in the middle of a pilot project supported through the Scottish Executive's Future Learning and Teaching (FLaT) programme. Phase one has just this week had a positive research report.
Peter Peacock, Education Minister, said: "This investment is a tangible demonstration of his commitment to work with us to modernise our schools.
Keith Grammar School has demonstrated innovative approaches to learning and teaching."
Mr Peacock added: "The investment in Keith Grammar is a good example of the benefits that private donors can bring to schools. Through our schools of ambition programme (right), we plan to offer more opportunities for such investments."
Lord Laidlaw said: "I firmly believe education is the key to transforming life chances and releasing the potential of our young people. So I am pleased to be supporting Keith Grammar's efforts to improve vocational education options."
Through his Laidlaw Youth Project, the peer has already donated pound;1 million to initiatives to support vulnerable youngsters, such as those leaving local authority care. This has been enhanced by a pound;250,000 contribution from the Executive.
Lord Laidlaw is reported to be planning to begin investing some Pounds 10-pound;20 million in charitable ventures from next year.