It will develop habitats in which the red squirrel can flourish but will also try to control the greys, which will involve killing them.
The Scottish Wildlife Trust (SWT), Scottish Natural Heritage (SNH), Forestry Commission Scotland (FCS), and the Scottish Rural Property and Business Association (SRPBA) are involved in the project.
Mike Russell, speaking while he was still environment minister, said: "The red squirrel is one of our most beautiful and valuable native species. Therefore its loss would be absolutely unforgiveable.
"Saving Scotland's Red Squirrels is a true partnership organisation and I am hopeful that its activity will see the red squirrels able to thrive once again in this country and ensure that future generations are able to enjoy them."
Ron McDonald, from SNH, said that grey squirrel control would be focussed on the key routes being used by grey squirrels to spread north.
"Greys have already displaced red squirrels from most of England, Wales and Scotland's central belt, but much of the north still remains grey-free," he said.
"With sightings of greys becoming more frequent in northern Perthshire and Angus, and a population of grey squirrels already established in Aberdeen, it is imperative that we act quickly to protect red squirrels north of the central belt and prevent the grey's further migration."
Stuart Brooks, from SWT, added: "I can understand and empathise with those people who do not like the prospect of killing wild animals, but it is disingenuous to say that there are viable alternative solutions to saving the red squirrel in Scotland.
"Work is under way on a vaccine for squirrel pox but it is not around the corner and habitat improvements are a key component of our longer-term strategy.
"To do nothing now will certainly consign our native squirrel to a painful and lingering death."
The SSRS project is expected to start work properly in April.
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