The donation is described as the largest the refugee agency has received in its 60 year history and comes at a time when some reports indicate that as many as 12 million people could be at risk around Africa's horn.
“This humanitarian gesture by the IKEA Foundation comes at a critical time,” said António Guterres, UN High Commissioner for Refugees and the head of UNHCR.
Guterres is currently in east Africa to assess the growing situation and developing human tragedy.
“The crisis in the Horn of Africa continues to deepen with thousands of people fleeing Somalia every week. We are extremely grateful. Help like this can't come a moment too soon."
The money will be used for the agency's operation to help thousands of Somali refugees at the vast Dadaab refugee complex in north-east Kenya and it is hoped that it will provide assistance to 120,000 refugees.
The Dadaab initiative is part of a broader partnership between the UNHCR and the IKEA Foundation which began last year.
“Supporting UNHCR, both immediately and over the long term, is one of the most effective ways to immediately make a difference in the lives of thousands of refugee children and their families,” said Per Heggenes, Chief Executive Officer of the IKEA Foundation.
The camp in northern Kenya was first opened in the early 1990s after the onset of the civil war in Somalia and has experienced a dramatic surge in numbers this year.
Originally designed for 90,000 people it is now home to some 440,000.