The Anholt wind farm will be 20km off the northeast coast of the Jutland peninsula and is due to be complete and producing electricity in 2013. The project was approved by parliament yesterday.
Anholt, like the Horns Rev and Rodsand projects before it, is sponsored by the Danish government.
Dong was the only bidder for Anholt and there have been some questions raised over the price it has paid. The total cost will be around DK10billion ($1.65billion).
Anders Eldrup, Dong chief executive, said: "Building Anholt offshore wind farm is an important milestone in the expansion of green energy production in Denmark."
Anholt came up for tender in 2008. Transmission capacity on shore is already available and was a deciding factor in selecting the site.
The decision to proceed with a new round of government-sponsored offshore wind farm construction was taken in February in a cross-party parliamentary agreement.