 Nissan is hoping to cash in on the booming Russian market |
The $200m (£99.5m) St Petersburg plant will open in 2009, employ 750 people and produce 50,000 cars a year.
Russia's booming economy and fast growing market has attracted a number of carmakers in recent years - most notably Toyota, Renault and Kia Motors.
Accountants PricewaterhouseCoopers have predicted that the Russian car market will be worth $96bn in sales by 2011.
"This is a significant step for Nissan in Russia," Nissan executive vice president Carlos Tavares said at a ceremony to mark the start of work on the site.
"Geographic expansion is very important to us."
Nissan, Japan's second-largest carmaker, will assemble X-Trail 4x4 cars and Teana saloons at the site for sale exclusively in Russia.
Building of the plant comes almost a month after Nissan said its bosses would not be paid bonuses this year after the group suffered an 11% drop in profits, the first decline in seven years.
