The missile being developed is the Standard Missile-3 Block IIA, a co-development program by the United States and Japan.
"As the threat continues to evolve, so does our ability to counter that threat," said Taylor W. Lawrence, president of Raytheon Missile Systems.
The SM-3 is designed to destroy short- and intermediate-range ballistic missiles and is used by the U.S. Navy and Japanese Maritime Defense Force.
The new variant will feature a 21-inch, second- and third-stage rocket motor bigger and better kinetic warhead.
Raytheon said the Block IIA is scheduled for deployment in 2018.
"The SM-3 IIA's larger rocket motors will allow for a greater defended area, which is an important factor when it comes to protecting both the U.S. and our NATO allies," said Wes Kremer, vice president of the Air and Missile Defense Systems product line for Raytheon Missile Systems.
2014: The Year in Music [PHOTOS]