Described as a "social distillery", the venture will bring 20 new jobs to the local economy while promoting the spirit of life on the island in the Outer Hebrides.
Its chief product will be a new single malt called The Hearach, which owes its name to the Gaelic word for an inhabitant of Harris.
The distillery will aim to produce 300,000 bottles of Hearach each year, along with its own Harris gin.
Both drinks will be distilled, matured and bottled at the site in Tarbert, which is scheduled to open at the beginning of 2015.
Simon Erlanger, director of distillery, said: "We are building the 'social distillery' for the island and people of Harris.
"The Hearach single malt will create sustainable employment and economic growth and optimism for the people of Harris, while the spirit of Harris itself will shape the unique character of this new whisky.
"The way of life in the island has deep roots, its people take time to savour what they enjoy and we believe The Hearach single malt will reflect that."
Founder and chairman Anderson Bakewell added: "What is particularly exciting, at a time when Scotch whisky is enjoying spectacular growth, is the prospect of bringing something of real value both to the industry and the islands."
The first production of The Hearach will not be available in shops until it has matured for a number of years. However, a limited number of casks from the first year's production will be available for sale to individuals.