Aldi is to be the anchor tenant on the new Cottam Hall Brickworks development on the outskirts of Preston.
The news means three discount supermarkets will now serve the thousands of new homes being built across the north of the city.
Aldi only opened its new store on the Fulwood Central shopping park at the junction of Eastway and Oliver’s Place in August.
And Lidl has also announced plans to build one of its own less than a mile away on a mini retail park near to Eastway’s junction with Garstang Road.
Now the Cottam store means the two German discounters will dominate the north of Preston where housebuilding is booming - almost 5,000 new homes were given council approval last year alone.
The deal with Aldi was struck with BXB Cottam Properties Ltd which is building the second phase of the old brickworks site at the rear of the recycling centre off Tom Benson Way.
The brownfield site will be transformed to provide a “much-needed” retail offer, together with commercial, community and residential.
A planning application is set to go before the city council soon.
Gary Goodman, a BXB director, said: “We are delighted to have agreed a deal with Aldi, as they have identified the Cottam Hall Brickworks site as a suitable location for a new store.
"This positive news comes on the back of our successul public consultation exercise on our pending development peoposals for the site.
“It was clear during the consultation that Aldi would indeed make a positive contribution to the local community.
"We now believe that the 'district centre' that has for so long been identified for this site can finally be delivered.
"We are still working extensively with the key stakeholders to ensure this is achievable. However it is very clear that the local community and the market want this development to come forward and all parties have a responsibility to meet these aspirations."
An Aldi spokesperson added: "This site compliments our expansion plancs across Preston and the North West following on from our successful store opening at Fulwood Central last year.
"We are looking forward to bringing our award-winning products to the local Cottam community."
The new store will be Aldi's fifth in Preston, adding to supermarkets in Corporation Street, Queens Retail Park, Blackpool Road, Deepdale and the Fulwood Central shopping park.
The compan y also has stores in Bamber Bridge, Leyland, Chorley (2), Longridge, Garstang and Wesham.