The site was one of three for which the Johnnie Walker and Bell’s producer submitted planning permission last year.
The new distillery will be next to the company’s existing Teaninich distillery but will have its own name and identity. It will create up to 20 jobs.
Diageo hopes to begin work on the new distillery in 2014. It will cost £50 million and have capacity to produce some 13 million litres of spirit a year from 16 copper stills.
Teaninich was chosen ahead of Glendullan and Inchgower on Speyside for the development, part of a five-year £1 billion investment to increase Diageo’s Scotch whisky capacity.
Malt distilling director Brian Higgs said: “All three sites we considered for the new malt distillery were excellent potential locations but, after detailed investigations, Teaninich came out just ahead in terms of the many complex logistics required when planning such a development.”
Diageo also plans to spend £12 million in expanding the existing Teaninich distillery to almost double its capacity.