Developer Atlantis has signed a 25-year seabed lease for the multi-million pound MeyGen scheme, which will be built in the Pentland Firth between Orkney and the Scottish mainland.
It is the largest marine energy lease to be awarded by the Crown Estate and is the first in the region.
Atlantis plan to start installing devices in the Inner Sound of the firth over the next two years.
By 2020, 61 of the 269 turbines proposed could be in place. The installation is expected to power 175,000 homes.
Atlantis have secured more than £51million in funding for the first phase of the project, including £17.2m from the Scottish Government.
MeyGen chief executive, Dan Pearson, said: “Signing the lease with the Crown Estate is a significant achievement.
“It demonstrates how a commercial scale energy project can be designed, consented, engineered and funded within four years.
“This is the culmination of a talented and committed team working alongside stakeholders and governments who are determined to launch a new energy sector within Scotland and the UK.
“We are thankful to all who have helped us along the journey and look forward to delivering the first phase.”
Construction on the project is expected to begin later this year, with the first power generated in 2016. It is expected to create 120 jobs.