The West Midlands-based luxury carmaker agreed a "milestone" deal with Chery Automobile and will build a plant near Shanghai, which is due to open in 2015.
JLR said any cars produced would be in addition to its existing output, and it had no intention of moving its manufacturing base out of Britain.
Sales of JLR models in China have risen by 80% so far this year.
The company, owned by India's Tata Motors, began talks with Chery months ago, but had been awaiting approval.
A joint statement released by the Chinese and British companies said: "We are delighted to have reached this milestone, achieved thanks to the understanding and foresight of the Chinese authorities and we want to thank them for recognising the potential of our joint venture in the fast-growing Chinese market.
"Together, we will now begin working in close collaboration on our partnership plans to harness the capabilities of our respective companies, to produce relevant, advanced models for Chinese consumers."
JLR has not said officially which model would be built at the factory, although the company has said in the past that is likely to be either the Land Rover Freelander or Evoque.
A research and development facility and engine production plant will also built as part of the venture, with the main manufacturing plant expected to be completed during 2014, with production starting the following year.
With China now a crucial market for JLR, building vehicles in the country means it can avoid import duties.
However, JLR says that being in China will enable it to build vehicles designed specifically for the Chinese market.
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