A site 20km off the Central Jutland region will be offered to potential developers this year. It will eventually be developed into an 800MW wind farm called Thor, with grid connection scheduled for 2024 to 2027.
The site west of the Nissum Fjord was chosen ahead of an alternative site in the Baltic Sea, following an investigation launched in September 2018.
Denmark’s energy agency stated that the North Sea site would "give the Danes the most green energy for the money".
Energy minister Lars Christian Lilleholt said: "The forthcoming offshore wind farm will be our largest, and it will make a major contribution to local growth and the green transition.
"Offshore wind is a Danish specialty, and the North Sea is well on its way to becoming a Silicon Valley for offshore wind, which is only emphasised today."
The North Sea site will be the first of three to be tendered before 2023, as agreed in Denmark’s energy deal last summer.
Other areas being considered for future development include a site in Jammerbugt off the country’s north coast, one at Hesselø to the east, and a third at Kriegers Flak in the Baltic Sea.
"It is very gratifying that the first step in choosing a location for Denmark's next large offshore wind farm has now been taken," said Jan Hylleburg, director of the Danish Wind Industry Association (DWIA).
"The North Sea off the west coast of Jutland is an obvious choice because it offers some of Europe's absolute best conditions for offshore wind.
"Thor [will] make a significant contribution to Denmark's green transition, employment in the wind sector and is an important step on the way to turning the North Sea into a Silicon Valley for offshore wind," he added.
By 2030, two further 800MW wind farms will be developed, under the 2018 energy agreement.
The government expects offshore wind to be able to produce electricity "under market conditions without public support, according to the energy agreement.
Denmark currently has just over 1.3GW of operational offshore wind capacity, according to Windpower Intelligence, the research and data division of Windpower Monthly.