Aston Martin will manufacture the Cygnet luxury city car at its Gaydon headquarters in 2011.
The decision showed Aston Martin's continued commitment to UK manufacturing, the car firm said.
The Cygnet is the eighth car manufactured by Aston Martin at the Warwickshire site since 2004.
Production would be delivered by "a dedicated local workforce and suppliers" Aston Martin said.
The Cygnet has been tailor made for city driving according to Aston Martin. The car is just three metres in length and offers low emissions, Aston Martin said.
Marek Reichman, director of design at Aston Martin, said: "Cygnet is small but luxurious, an Aston Martin tailor fit for the city. Luxury is not constrained by scale."
The Cygnet was first announced as a concept car in March. Further specification and pricing details will be released later this year, Aston Martin said.