The contract is worth $115.5 million, the company said. Work on the 20mm system is expected to be completed in late 2017.
Phalanx, with a computer-controlled radar, is a Gatling gun system that automatically acquires, tracks and destroys enemy threats that have penetrated all other ship defense systems. It has an effective range of 2.2 miles and a firing rate of 4,500 rounds a minute.
The Navy's SeaRAM Anti-ship Missile Defense System, on Independence-class Littoral Combat Ships, will feature advanced Phalanx Block 1B sensors. The 20mm guns will be replaced with an 11-round rolling airframe missile guide.
Raytheon has built more than 890 Phalanx systems, which are used by navies around the world.
Additional details of Raytheon's work under the new contract were not disclosed.