Architect Frank Gehry is to design the Guggenheim Foundation's largest museum in the United Arab Emirates.
Gehry also designed the Guggenheim in Bilbao
The museum, which will cover 30,000 square metres, will be built in the capital city of Abu Dhabi.
Guggenheim's flagship museum for modern and contemporary art is in New York but there are branches in Bilbao, Berlin, Venice and Las Vegas.
US architect Gehry also designed the Bilbao Guggenheim in Spain. The Abu Dhabi museum should be built by 2011.
Construction is due to begin shortly on Saadiyat Island, which is being developed as the city's cultural district, government officials said.
Known more for its oil and tourism industries than its culture, the museum will be the first major art showcase in the city.
"Today's signing represents the determination of the Abu Dhabi government to create a world-class cultural destination for its residents and visitors, "said Abu Dhabi's crown prince Sheik Mohammed bin Zayed Al Nahyan in a statement.
The chairman and chief benefactor of the Guggenheim Museum quit last year following a row over its future.
Peter B Lewis, who had held the post since 1998, blamed "differences in direction" between himself and museum director Thomas Krens.
The pair were reportedly at odds over plans to turn the New York-based art museum into a global brand.
Mr Lewis, a billionaire, donated about $77m (£41m) to the institution during his time as chairman.
He told the New York Times that he believed the museum "should concentrate more on New York and less on being scattered all over the world".