Sanford says the funds will go to the San Diego Consortium for Regenerative Medicine - four institutes that will collaborate on the research.
Human embryonic stem cell research is controversial, but scientists say it could aid the treatment for a range of diseases. Stem cells can grow into any kind of tissue in the body.
In 2000, South Dakota banned anyone from knowingly conducting "nontherapeutic research that destroys a human embryo" or research that subjects an embryo to "substantial risk of injury or death." It also bans anyone from using for research purposes "cells or tissues that the person knows were obtained" through embryonic stem cell research.
Using such cells for science kills human life, say embryonic stem cell research opponents.
Sanford Health of Sioux Falls, which got a $400 million pledge from T. Denny Sanford last year, has vowed to cure Type 1 diabetes using regenerative medicine. Officials at Sanford Health say the latest donation won't directly affect their diabetes effort.
The philanthropist said Type 1 diabetes is one of several diseases that could benefit from stem cell research.
The donation "makes sense because I believe that stem cell technology may be a significant part, if not the major (driver) of medicine in the future," Sanford said Tuesday.
The San Diego consortium includes the Burnham Institute for Medical Research, the University of California-San Diego, the Salk Institute and the Scripps Research Institute. It will be renamed the Sanford Consortium for Regenerative Medicine.
The California Institute for Regenerative Medicine has made a $43 million grant. That plus the Sanford donation will help build and equip the new center, to be built next to Torrey Pines Golf Course.
Burnham is a major research partner of Sanford Health, thanks to a $20 million donation last year.
The latest donation isn't directly linked with Sanford Health's research efforts with Burnham, said Dave Link, Sanford Health executive vice president.