Under the direct commercial sale signed late last year, Raytheon will install the systems aboard the Incheon-class frigates, known as FFX frigates after the Future Frigate Experimental development program, under construction.
They also will be used on the navy's fast combat support ships, AOE vessels.
A statement from Raytheon said the contract is the largest for the Phalanx system and deliveries will start in 2016 for completion in 2022.
"Phalanx counters sophisticated subsonic and supersonic anti-ship missiles while increasing the outer perimeter for ship self-defense," Rick Nelson, Raytheon's vice president of naval and area mission defense product, said.
Phalanx is a rapid-fire, computer-controlled radar and 20mm gun system that automatically acquires, tracks and destroys enemy threats that have penetrated all other ship defense systems.
More than 890 systems have been built and deployed in the navies of 25 nations.
South Korea's Yonhap News Agency reported in July that Hyundai Heavy Industry's shipyard in the southeastern city of Ulsan had launched the navy's second 2,300-ton Incheon-class vessel, the Gyeonggi.
The lead vessel, the Incheon, was launched in April 2011 and is in active service.
Naval officials said the Gyeonggi -- named after Gyeonggi province that surrounds Seoul -- will be delivered to the navy this year for deployment in 2015.
South Korea plans about 20 frigates to replace the country's aging Ulsan and Pohang patrol escort ships by 2020. The vessels were built between the early 1980s and the early 1990s.
The Pohang-class vessels were built by Korea Shipbuilding Corp., Hyundai Heavy Industries, Daewoo Shipbuilding and Korea Takoma. Hyundai Heavy Industries also built the Ulsan guided missile ships.
The Incheon and Gyeonggi vessels are South Korea's first coastal patrol vessels built after the sinking of the 1,200-ton naval corvette Cheonan -- a Pohang-class ship -- allegedly by North Korea in March 2010.
The Cheonan sank rapidly after an explosion from a suspected torpedo ripped the vessel in half. It went down just more than 1 mile southwest of Baeknyeong Island near the de facto sea border with North Korea.
North Korea consistently denies it had anything to do with the sinking.
Raytheon's Phalanx deal for FFX vessels follows an announcement earlier this month that it had sold South Korea's air force additional AGM-65G-2 Maverick missiles.
Korea's Defense Acquisition Program Administration awarded the £31 million ($42.6 million) contract to Raytheon, the company said in a press release.
The precision-guided air-launched AGM-65G-2 Maverick is effective against fixed, stationary, moving and maneuvering targets on land and sea.
It has two warhead options -- a 300-pound blast fragmentation or a 125-pound shaped charge.
Raytheon said more than 7,800 Mavericks have been launched in combat by at least 25 variants of fighter aircraft.