DCI, whose main shareholder is the French government, was created in 1972 to assist military equipment sales to foreign countries by providing outsourced services to end-users.
The center will train sailors for service aboard two Franco-Spanish-made Scorpene submarines based at Kota Kinabalu, a statement by DCI said.
"Malaysia recently announced that from early next year the base will be the first training center in the world for Scorpene submarine crews," DCI said.
The school will be set up by DCI teams as part of Malaysia's strategy for creating a submarine force.
DCI, in conjunction with French navy, has spent four years training two complete crews and reserve submariners for the Scorpenes, the DCI statement said.
"We are delighted to continue our collaboration with the Malaysian navy by the creation of this school," Adm. Francois Dupont, executive vice president of DCI, said.
"We are fully committed alongside Malaysia with a common will to succeed."
The submarines, named Tunku Abdul Rahman and Tun Razak, are operational despite government critics saying they have operational difficulties.
Navy chief Adm. Tan Sri Abdul Aziz Jaafar reiterated last week that the Scorpene submarines are well-maintained and capable of carrying out operations to maintain national security, the Bernama news agency reported.
The submarines, delivered in 2009 and 2010, have carried out numerous operations under his instructions, Abdul Aziz said.
Even so, the $1.1 billion deal has been dogged by questions of alleged bribery and a young woman's murder, a report in July by channelnewsasia.com said.
It focuses on allegations that French submarine maker DCNS paid a commission of more than $142 million to a suspected shell company linked to Abdul Razak Baginda, a former close associate of Malaysian Prime Minister Najib Razak, leader of the coalition government.
Malaysia's opposition critics said the payments were kickbacks to top officials involved in the submarine purchase, channelnewsasia.com said.
Abdul Razak's mistress, who was said to have demanded a payoff for working as a language translator in the deal, was killed in an explosion near Kuala Lumpur in 2006.
But in 2008 a Malaysian court cleared Abdul Razak of involvement in the killing, creating opposition allegations of a coverup.
The submarine deal could continue to be in the headlines in Malaysia. French judges launched an investigation into the affair after further complaints by Malaysian human rights group Suaram in April, channelnewsasia reported.
2014: The Year in Music [PHOTOS]