Jean and Martine Donnay have been granted planning permission to build a distillery at Gartbreck Farm, near Bowmore, by Argyll and Bute Council.
It is hoped the facility will be up and running by autumn 2015, with 10 people employed by the time it reaches its peak production level in its fourth year of operation.
The duo, who previously designed and built a distillery in Brittany, north-west France, are investing £2.5 million in the project.
The investment will cover the refurbishment of farm buildings and purchase of whisky-making equipment, which includes two pot stills and wooden wash- backs made from Oregon pine.
Mr Donnay hailed his good fortune in securing the acquisi-tion of Gartbreck Farm in July 2012, and declared his relief in securing planning permission after 10 months of positive talks with Islay Estates. The application required a change of use consent to allow a distillery to be developed in the buildings.
With the exception of the farmhouse, where the Donnays plan to live when visiting the island, the buildings are said to be in poor condition.
Mr Donnay said: "I built a distillery in France, in Brittany, which I fully designed and has been operating since June 2005.
"Somewhere in the corner of my mind I had the idea to build another distillery, because having already designed and built a distillery it was easier for me to build another one.
"When you are passionate about whisky, what better place is there than Scotland can you think to build a distillery? Building a distillery in Scotland on Islay is the best I could dream of."
Mr Donnay, who established a whisky blending and bottling business in France in 1997, will adopt a little-used production technique at the Islay distillery.
Its two stills, which will face the sea through a glass gable, will be heated directly by a live flame instead of steel coils.
The technique, which Mr Donnay said is used only by Glenfarclas, Springbank and Glenfiddich in Scotland, is essential for the texture and aromatic profile he wants the whisky to embody.
And although it is more expensive the distillery will look to make savings in other ways.
Gravity will help it draw its water supply from Grunnd Loch 900m away, while 20% of its peated malt needs will be met by buying barley locally and using its own malting floor and kiln.
The distillery will produce only one whisky, a single malt, which the owner said would be "typical" of Islay's peated style.
Mr Donnay said the distillery will also make gin in limited batches to generate cash while he waits for the whisky to mature.
Bottlings from other distilleries will also be sold to visitors to achieve that end.
Mr Donnay said: "It normally takes quite a few years for a [whisky] business to be cash-flow positive.
"It is important we have good cash flow soon.
"This is what we did in France."
As well as producing spirits, Gartbreck will offer a visitor centre, with the owners pledging that the interior of the buildings will be sympathetic to the location.
Gartbreck will be the first distillery to be built on Islay since Kilchoman was established in 2005. The island's other active distilleries are Ardbeg, Bowmore, Bunnahabhain, Bruichladdich, Caol Ila, Lagavulin and Laphroaig.
A spokeswoman for the Scotch Whisky Association said: "It's great to see new Scotch Whisky distilleries being planned and built.
"It's another reflection of confidence in the industry and optimism about the future."