In an editorial in the Dagens Nyheter newspaper the foundation's representatives said the money would be spread over 10 years.
The foundation is the largest private financier of research in Sweden and also one of Europe’s largest.
"We need to quickly find new and innovative ways to strengthen Sweden's competitiveness in the medical field. We hope that our additional contribution of 1.7 billion can be a valuable component," said Göran Sandberg and Peter Wallenberg Jr of the foundation in the article.
The pair said the money will be used to establish new laboratories used for conducting molecular medical research in Gothenburg, Lund, and Umeå.
Sandberg and Peter Wallenberg Jr added that the money would "give researchers the freedom to invest in more innovative and risky projects which increases the possibility for scientific breakthroughs".
In addition to the 1.7 billion the foundation is also investing some two billion kronor in other research projects, of which 600 million will be use for medical research.
During the past five years, the foundation has granted a total of 5 billion kronor for various projects, mainly at Swedish universities.
The foundations website says its purpose is "promoting scientific research, teaching and education beneficial to the Kingdom of Sweden".