The data centre in Lulea will be the largest of its kind in Europe, and the northernmost of this magnitude on Earth. It is Facebook's first in Europe and will serve more than 800 million site users.
"We concluded Lulea offered the best package of resources, including a suitable climate for environmental cooling, clean power resources, available land, talented regional workforce and supportive business and corporate environment," said Tom Furlong, Facebook's director of site operations.
Lulea is about 1,000 km north of the capital, Stockholm.
The data centre, to run primarily on hydropower, will consist of three server buildings, construction of which will begin immediately.
"The first building is to be operational within a year and the entire facility is scheduled for completion by 2014," the company added.