The Sunderland plant will make a yet-to-be-named compact 5-door hatchback.
Around 1,000 employees will work on the vehicle, including up to 200 new staff.
Nissan has invested £125m in the project, with £24m going on preparation at the plant and its suppliers. The company expects to be building around 100,000 units a year once production begins in January 2006.
Sunderland already make Micras, Almeras and Primeras, and from next Septernber they will also be producing Micra C+Cs.
Nissan executive vice president Patrick Pelata said the new car would be based on the `Tone' concept unveiled at the Paris Motor Show which started today.