Search giant Google has decided to base its first Latin American data centre in Chile, near the capital Santiago.
The project is expected to cost $150m (£94m) and will employ up to 20 people, said the company.
Google said it chose Chile because of its reliable infrastructure and skilled workforce.
The country has been trying to become a tech hub, with initiatives such as Start-Up Chile attracting entrepreneurs from around the world.
The search giant said the computer servers at the data communications centre would make its products faster to access and more reliable for the local population.
The selection of Chile, rather than Brazil - which has a much larger population, is more centrally located and has a fast-growing tech sector - is a coup for the nation.
"Chile… fosters an atmosphere of innovation, and in recent years has developed cutting edge policies and programs that encourage the growth of the internet," Google said.
"As with all of our facilities around the world, we chose Quilicura, Chile, following a thorough and rigorous site selection process, taking many technical and other considerations into account including location, infrastructure, workforce, reasonable business regulations and cost."
Google already has data centres in the United States, Finland and Belgium, and plans to build more in Hong Kong, Singapore and Taiwan by next year.
The centre in Chile is scheduled to be completed by the end of 2013.
Opening a data centre in Latin America may help Google's ambitions in the region.
Orkut, a social network operated and owned by Google, used to be number one in Brazil and several other places in Latin America.