The money is to be used to demonstrate how a city of the future might work.
The developments will include real-time information about traffic and apps to check buses and trains are on time.
An app will also be created to report issues such as potholes and missing bin collections.
CCTV cameras across the city could also be linked with Glasgow’s traffic management in order to identify traffic incidents faster.
Other UK 'smart cities' include Birmingham, Sunderland and London.
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Glasgow received its grant from the Technology Strategy Board (TSB), which was set up by the UK government in 2007 to stimulate technology-enabled innovation.
"Glasgow has some quite extreme challenges - it has the lowest life expectancy of any city in the UK for instance - and the hope is that if we bring together energy, transport, public safety and health it will make it more efficient and a better place to live," said Scott Cain, the TSB's project leader for Future Cities.
"The thinking behind it is to have somewhere in the UK where firms can look at the efficiencies, the investments and how you can address the challenges of a city," he added.
Universities and Science Minister David Willetts made the announcement in Glasgow. He said: "With more people than ever before living in our cities, they need to be able to provide people with a better quality of life and a thriving economy.
"From transport systems to energy use and health, this demonstrator will play a key part in the government's industrial strategy and give real insight into how our cities can be shaped in the future."
(IT/GK)
