Speaking at a virtual event in Athens on Monday, Microsoft President Brad Smith said the new hub would be beneficial to business, consumers and banks.
The size of the investment was not disclosed but government spokesman Stelios Petsas said that it would involve new infrastructure at a cost of 500 million euros and annual spending of 50 million euros in the coming years.
"There will be benefits for Greece given our commitment to training for thousands of people," Microsoft's Smith said through a translator.
He later tweeted that the investment will be Microsoft's biggest in Greece in its 28 years of operating in the country. "This reflects our optimism in Greece's future and economic recovery," he said.
Greek Prime Minister Kyriakos Mitsotakis said the data centre would bring long-term financial benefits of 1.0 billion euros ($1.17 billion) to Greece.
"Greece will become a world hub for cloud," Mitsotakis said, adding that the state-of-the-art centre would also upgrade the country as an investment destination.
He said the project will include a training program in digital skills for about 100,000 people.
($1 = 0.8519 euros)
(Reporting by George Georgiopoulos and Angeliki Koutantou; editing by Kirsten Donovan)