The Social Democrat and Green coalition said that Sweden would contribute a rapid reaction force of up to 150 troops and helicopters as part of international efforts to boost security in the region.
"That, in its turn, will make it easier to carry out development activities in Mali which are needed to promote a sustainable and peaceful development in the country," Foreign Minister Ann Linde said in a statement.
"The decision will also mean we can contribute to the fight against international terrorism and ultimately also make Sweden safer and more secure."
Parliament has to approve the government's decision.
Sweden has had a small number of troops in Mali since 2013 as part of the United Nations' Multidimensional Integrated Stabilization Mission.
France, the former colonial power, has 5,100 troops in Mali and the wider Sahel, but security has been progressively worsening since it intervened in 2013 to stop a jihadist advance to the Malian capital, Bamako. (Reporting by Simon Johnson; Editing by Alex Richardson)

epa05974644 French President Emmanuel Macron (C) visits the troops of France's Barkhane counter-terrorism operation in Africa's Sahel region in Gao, northern Mali, 19 May 2017. French President's visit in Mali is his first trip outside Europe since his inauguration on 14 May 2017. EPA/CHRISTOPHE PETIT TESSON / POOL MAXPPP OUT