The project is called Gwynt y Mor - which translates as "wind in the sea" - and is to be led by German company RWE Innogy in conjunction with Stadwerke Munchen and Siemens.
Costing over €2 billion (£1.66 billion), work will begin on the 160-turbine farm in 2011 and will be finished in 2014.
Speaking to the BBC, Welsh secretary Cheryl Gillian said: "This is excellent news. Gwynt y Mor will be one of the single biggest private investment projects ever seen in Wales."
She went on to claim that the venture will create up to 1,000 jobs and generate enough low carbon energy to cater for the needs of around 400,000 homes.
Environmentally friendly, the farm is predicted to cut carbon emissions by around 1.7 million tonnes a year.
Posted by Jonathan Gordon