The self-test kit delivered under the grant should be much cheaper than that which Atomo has already developed for sale in rich countries, which includes a digital interface and Bluetooth functionality.
Atomo and the Gates' foundation have agreed a target of 20 million of the cheap kits be produced over the next three years.
The grant follows a $2.6 million investment from the Gates-backed Global Health Innovation Fund (GHIF) in August as part of an equity raising, and a $7.8 million loan from GHIF in January.
GHIF owns 8.4 per cent of Atomo, and the largest shareholders remain the founding team led by chief executive John Kelly; property development billionaire Lang Walker's Walker Group owns 23 per cent, while Macquarie Bank founder Allan Moss also is a backer.
"We have sought always to develop simple, low-cost solutions that remove errors common with the current generation of 'bits in a box' test kits," Mr Kelly said.
"This grant is an endorsement of our innovative user-friendly approach to testing and our commitment to making a positive impact on global health."
The grant money will be used to develop and launch a HIV self test in countries most affected by the disease, which involves liaising with their public health systems, Mr Kelly said.
More than 120 million HIV rapid diagnostic tests are used annually in resource-poor countries and, according to the World Health Organisation, demand for testing is projected to increase significantly until 2020.
Self-testing will support the United Nations' 'AIDS goal' under which it is aiming to have 90 per cent of HIV-positive people know their status by 2020, Mr Kelly said.
Atomo is working towards approval for its existing HIV self-test to be sold in Australia. It won a grant from the NSW Medical Devices Fund last year and all of the development and design work is done in Leichhardt in Sydney's inner west.
It also has offices in South Africa and the UK.
Its manufacturing partner IDE also is Sydney-based, although it oversees a global supply chain – for instance, the diagnostic strips are made in South Africa.
In the meantime, Atomo's revenue comes from sales of its HIV test kits for professional use in hospitals, as well as white-labelling of its self-diagnosis platform by medical companies wanting to use it for tests on other diseases.
The $US108 million GHIF was established in 2013 by the Bill & Melinda Gates Foundation and JP Morgan, and Mr Gates' foundation nominates an advisor to the fund and is one of several investors.