It has been launched by the association that represents thousands of officers.
The Police Federation said officers took 37,674 days off sick last year because of the problem.
Federation chairman Mark Lindsay described the resources the PSNI devotes to tackling the issue as "pitiful and wholly inaccurate"
In his speech to the association's annual conference in Belfast, he described the current situation within the police as "a professional scandal".
"This problem needs this urgent intervention," he said.
"Whole families are suffering because those hurting are falling through the cracks."
He said the fund announced on Wednesday would be used during the next three years to provide additional therapists and psychologists dealing with the issue.
Mr Lindsay said the fund was a temporary measure, and that it was the "statutory duty" of the Police Service of Northern Ireland and Department of Justice to address the problem.
Last week, three officers who have been treated for post traumatic stress disorder PTSD spoke to the BBC about their experiences, and problems getting treatment.
A £1m fund has been set up to help police officers suffering from post traumatic stress disorder and other psychological illnesses.