The dairy will provide around 500 jobs and will be operational at some point in 2012, said a company spokeswoman.
The news follows a blizzard of speculation amongst media and analysts about the likely site for the dairy after Arla first announced plans to build it in November 2009.
The spokeswoman said: "During the land search, Aylesbury emerged as the front‐runner giving the best overall logistics solution to service Arla’s customers, when considering both raw milk collection from farm and finished product to the retailers. It also provides the best access to a densely populated area. “
She claimed that the new dairy will be the most ‘environmentally advanced in the world’ and said Arla planned to establish the site as a zero-carbon operation.
Jakob Nielsen, Arla project director, said: “We are already working with the local authority to agree the scope of the planning application and we are in the process of finalising the design specifications. The next step is to appoint contractors to work with us on the project.”