Work includes replacing mechanical and electrical services, refurbishing the ground and first floors, removing asbestos removal and installing new fire protection.
Facilities will be replaced in operating theatres, radiology, pathology, critical care, pharmacy and outpatient areas, while the helipad will also be relocated.
All existing mechanical and electrical services will be replaced by Interserve Engineering Services.
Client for the project is Cwm Taf University Health Board, which is spending £119m on the project in total.
Interserve has previously worked on contracts under the Welsh government’s Designed for Life 1 Framework, but this is its first award under Designed for Life 3.
Design and survey work has already started with enabling works expected to finish in June 2015 in readiness for the main building works. The project is expected to take seven years to complete with the hospital remaining fully operational throughout the many stages of redevelopment.
Interserve Construction divisional director Andrew Edmonds said: “We are looking forward to working closely and collaboratively with the Health Board and its advisors, together with our local design partners and supply chain to ensure that patients in Merthyr Tydfil and neighbouring areas will benefit from the highest quality healthcare in modern, fit for purpose facilities.”