The Surf Snowdonia project at a former factory site at Dolgarrog in the Conwy Valley is due to open next summer.
The inland surfing lagoon will use technology called Wavegarden to drive waves up to 2m (6ft) high.
Tourism Minister Edwina Hart called it an "iconic attraction for Wales" during a visit for a ground-breaking ceremony at the site.
The plans include a "wave garden" with lagoons, water slide, wakeboard lake, lodges, restaurant, retail and play facilities and parking for up to 250 cars.
The developers said it would create 100 construction jobs with 60 jobs on site once it opens.
Announcing the funding, Ms Hart said: "This project clearly supports our strategy in creating new, perception-changing attractions.
"Surf Snowdonia will add a unique facility to an existing cluster of world class activity tourism products in the north Wales region and will drive growth by attracting additional higher spending visitors."
International Surfing Association president Fernando Aguerre said the centre would be suitable for world-class contests and could pave the way for the sport to be adopted by the Olympics.
He said: "Surfing no longer has geographical restrictions - venues can be built away from the coastline efficiently and sustainably.
"We can now reach new surfing participants and fans who have never been to or even seen the ocean."
Ministers are providing £4m funding for a planned new surfing centre and "wave park" in Snowdonia.