The Precious Lives Appeal has raised £2.75m for Little Harbour, Cornwall's first children's hospice.
The announcement was made at the official turf cutting ceremony near St Austell in front of a crowd of 800 people on Saturday.
It is hoped the £5m hospice will be open by the end of 2011.
Eddie Farwell, co-founder of Children's Hospice South West (CHSW), said it was a "manifestation" of the generosity of people from the area.
CHSW launched the appeal last year to build an eight-bedroom unit at Porthpean, near St Austell, for life-limited children.
Mr Farwell said: "We dedicated the site so that people understand that this is something very, very special. It was a real celebration of what we're doing and the children and young people who will use this place. "
Little Bridge House, near Barnstaple, was the first children's hospice built in the South West by CHSW which was opened in 1995. It was succeeded by Somerset's Charlton Farm which opened in 2007.