The motoring giant is set to transform the former Metal Castings site at the junction of Penn Road and Graiseley Hill, which has been empty for more than 10 years. Around 70 jobs will be created as part of the project.
Council bosses granted the scheme planning permission in May and the site is due to open for business in the first part of 2016.
The new dealership will cover four acres and will include a showroom and a service centre.
Planning permission had previously been sought to build a hotel and leisure complex at the site but the scheme never got off the ground.
It is a second major commitment from Jaguar Land Rover to the city after the opening of its £500 million engine factory at the i54 site which will see up to 1,400 jobs created.