The Transport for Wales depot in the village of Taff's Well, between Cardiff and Pontypridd, will house and service 36 of the new Metro trains operating on the Taff Vale lines.
The depot will also become the base for 400 train crew, 35 Metro vehicle maintenance staff and a South Wales Metro integrated control centre.
Clearance and construction work for the new depot is expected to start in 2019 and complete by mid 2022.
Transport for Wales will procure construction companies for the new depot through Sell2Wales and the Stride framework.
As part of the Welsh government’s £194m investment in station improvements across Wales, Taffs Well will also see its railway station being modernised, with the addition of a park-and-ride facility.
The new depot at Taffs Well will complement existing South Wales depots including the one in Canton, which will benefit from around a £5m investment to modernise maintenance facilities so it can support the new tri-mode rolling stock being introduced as part of the new rail service.
There will also be investment in stabling facilities in Treherbert and Rhymney, and an upgrade of the station at Rhymney to accommodate more and longer tri-mode rolling stock.
Economy secretary Ken Skates said: “The construction of the Taff's Well depot presents one of the first opportunities for Welsh suppliers to directly benefit from our £738m investment in the South Wales Metro which will see us creating a sustainable and connected transport infrastructure. I am genuinely excited about the benefits of this public sector investment making a real and tangible difference to Welsh businesses and communities.”
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