It will be used to stage competitive cycle sports as well as recreational events, coaching and training.
The Welsh Government has agreed to sign over some land near the entrance to Pembrey Country Park, meaning work can start shortly.
Welsh Cycling welcomed the announcement.
Chief executive Anne Adams-King said: "The development of cycling facilities in Wales is a priority for Welsh Cycling as they provide opportunities for all to cycle encouraging physical activity and progression through sport to elite performance."
It is expected to make more than £25,000 a year from entrance fees and caravan and camping stays.
Work will begin on a £500,000 purpose-built cycling circuit in Carmarthenshire after a funding boost from the council.