President of the IMechE, Professor Richard Folkson, formally made the donation while visiting the University's Department of Engineering and Mathematics.
Professor Jill Stewart, head of the department, said: "The support of AESSEAL and the Institution of Mechanical Engineers is hugely appreciated as we strive as a department to encourage more women to study and work in engineering. As a female academic, I am in a position where I can help promote engineering as an excellent career for girls, which is a task I hold very close to my heart.
"The donation from the Institution will support our highly talented female engineers."
Exactly how the funds will be directed to help encourage more women into the engineering department will be determined at an upcoming departmental meeting.
Professor Folkson said: "Sheffield Hallam's MERI is a leading facility, not only in the UK, but globally. We are pleased to be able to make this donation to such an important University, which is creating the next generation of engineers."
Sheffield Hallam’s Department of Engineering and Mathematics is one of the largest and most popular in the UK, with more than 2,800 students following fully accredited undergraduate, postgraduate and PhD programmes. The Department is currently undergoing an £11 million redevelopment, part-funded by Higher Education Funding Council for England, to provide additional resources and teaching facilities for Science, Technology, Engineering and Mathematics students.
Meanwhile, the Sheffield Hallam Solar Car Team have won an Institute of Mechanical Engineers award. The undergraduate engineering team, called Crucible, came first with their paper 'Design Review and Validation of the SHU ‘Huntsman’ Solar Car' at the Institution's Viscount Weir Communications in Engineering awards.