The drinks giant said improved packaging and technology at the Leven site prompted the move, adding that the rum would still be distilled in the Caribbean before being shipped to Scotland. The rum is matured and blended at Diageo's Menstrie Bond and later bottled at the Leven site.
Allan Burns, joint executive director of Diageo Scotland, said: "This is a boost for our manufacturing and supply team. Being awarded the production and bottling of Captain Morgan rum is the culmination of a lot of hard work and a significant investment on the part of Diageo Scotland.
He added: "We are focused on delivering a competitive edge through innovation and flexibility in all areas of the business. I am delighted that we could demonstrate that we had the capacity and skills necessary to meet the market demands of Captain Morgan here in Scotland."