The scheme, called Gwarchod - 'to protect' in Welsh -  will see the names of fields, river pools, caves and even ruined cottages collected and used to develop a definitive digital map.
The names will also make their way onto a National Library of Wales database.
The project's first priority is field names on the LlÅ·n Peninsula in Gwynedd.
Researchers want to initially focus on the names of sites in the rural seaside parish of Aberdaron.
The Welsh Place-Names Society's project has been backed by Natural Resources Wales, who will co-operate on developing the digital name map of Wales, and bodies such as the Heritage Lottery Fund (HLF).
Jennifer Stewart, the head of HLF in Wales, said:  "Place-names are an integral part of Wales' national identity which is rooted in the distant past.
"We are very pleased to support this project which will take essential steps towards ensuring the local place-names are recorded to create a national resource for everyone."
The issue of Welsh place names has prompted recent calls for more legal protection to prevent them from being replaced with English names.
The public is being invited to see the project work first hand at a drop-in day being organised by the Welsh Place-Name Society at Plas Glyn-y-Weddw in Llanbedrog, Gwynedd, on Thursday.
An ambitious project to gather and preserve historic place names for future generations has said it hopes to cover the whole of Wales.