The local authority has given a completion target date for the project of October 2014.
In addition to the new care home, the state-of-the-art village will include a meals-on-wheels facility, a day care unit, a drop-in facility for older residents in the local community, a hairdressing salon and an addition 21 extra care and five specific-needs bungalows.
Councillor Judy Hamilton, Executive Spokesperson for Social Work and Health, said: "I am proud and delighted to be here to see work on the site begin and the plans becoming a reality on the ground.
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"A lot of work has gone into designing and ensuring that the new care home will meet the needs of our current service users and those who will need care in the future.
"The future of the two care homes which are being replaced, Appin House and Raith Gates, will be considered in due course with the properties or land either being considered for alternative Council use or sold on the open market."
Councillor Andrew Rodger, Executive Health Spokesperson/Member of Fife NHS Board, added: "We are looking ahead and putting in place the means to provide and sustain quality care in the Kirkcaldy area. This is going to be a great development for Kirkcaldy and represents a significant capital investment of more than £7.5m in the infrastructure of Fife."
Fife Council will deliver the project through hub East Central Scotland, which was set up as a government initiative to support the delivery of affordable, sustainable and functional community facilities.
(JP/MH)
