CalPERS officials confirmed the fund is committing up to £106 million ($157 million) to acquire a 12.7% equity stake in London Gatwick Airport from Global Infrastructure Partners.
GIP, a buyout firm, purchased Gatwick in 2009 from BAA Airport.
Gatwick is the U.K.'s second-largest airport and the busiest single-runway airport in the world.
GIP, which is backed by Credit Suisse Group and General Electric, said in December it intended to sell stakes in the airport.
CalPERS has been ramping up a new asset class intended to hedge against inflation by investing in commodities, timberland, inflation-linked bonds and infrastructure such as power plants, airports and toll roads.
In March, officials at the $201.9 billion Sacramento-based pension fund said they intended to allocate as much as $1.3 billion this year to its infrastructure financing program.
The airport was offered for sale last year as Britain's Competition Commission pondered a breakup of BAA to reduce the company's dominance of the U.K. market. In February, GIP said it was selling stakes of Gatwick to the Abu Dhabi Investment Authority and to Korea's National Pension Service.
Andrew McCallum, head of communications for Gatwick, referred questions about the sale to GIP. Jack Cowell, a spokesman for GIP, didn't immediately return a call for comment.