The factory will employ around 1,000 people and replace two existing sites in Castleford and Cross Hills
Christopher Bailey, chief executive, said the new manufacturing and weaving site in South Bank,
Leeds, is needed "to keep up with the demand we have created" of the brand's trademark trench coats.
"I'm a great believer in British manufacturing" he added.
Due to open in 2019 and dubbed project artisan, it will employ around 1,000 people and replace two existing sites in Castleford and Cross Hills where around 800 work.
The British luxury goods company also announced plans to unify three of its collections - Prorsum, London and Brit - under a new single Burberry label.
The plans were unveiled as Burberry kicked off its festive season in a campaign featuring faces such as Romeo Beckham and Naomi Campbell.
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