A dust storm blew behind ACT Chief Minister Katy Gallagher as she turned the first sod on the Ikea store in Majura Park on Wednesday afternoon.
Ms Gallagher said the Swedish furniture giant - which expects to sell 24 tonnes of meatballs within a year of opening - was a vote of confidence in Canberra, which would be good for the economy and local jobs.
"This is fantastic news for our local economy and shows what exciting results can be achieved when we work closely with the private sector to create new investment opportunities," she said.
"I think most Canberrans look forward to the opening and not having to drive up to Sydney, as so many of us have done over the years."
The store will open in late 2015 and is expected to employ close to 280 people and attract a million visitors a year.
The store will also include a 340-seat restaurant, a childcare centre, and a solar panel energy system that will generate up to a quarter of the energy consumed by the store.
Ikea Australia country manager David Hood said he was thrilled work had finally begun.
"Ikea has been in discussions about opening a store in Canberra for several years, so it's very exciting to be finally able to start work on this new store development," he said.
The store plans to sell 23 tonnes of cinnamon buns within a year of opening and 300,000 hot dogs, which, if placed end-to-end, would extend from Canberra to Yass.
Ms Gallagher said "one of the great things about a business like Ikea coming to town is they tend to attract other businesses that work with them in other parts of the world to also look at what's happening in Canberra".
Store manager Mark Mitchinson said he was busy sorting through applications for the 280 jobs on offer to keep the 26,000-square-metre store humming.
"I'm one of the first to move down here and we'll see how that team grows," he said.
"We've got a little office space here and that's very exciting, as we're planting a seed and starting to see everything grow from there."
The Majura Park store will be the seventh Ikea store to open on the east coast of Australia.