The investment in the office, near Oxford Street in the heart of the city's West End district, will also lead to the creation of 800 jobs, more than half of which will be in engineering.
The company, which opened its first office in the British capital ten years ago, said the new site would allow its local workforce to reach 2,300 by the end of next year, a sign that it "is more committed than ever to the UK".
The country "has been a huge part of Facebook's story over the past decade", Nicola Mendelsohn, Facebook's vice president for Europe, the Middle East and Asia, told Britain's Press Association.
"The UK's flourishing entrepreneurial ecosystem and international reputation for engineering excellence makes it one of the best places in the world to build a tech company," she said.
The 23,000 square metres of office space was designed by architect Frank Gehry, and is spread over seven floors while also incorporating a new public square.
It includes an incubator space called "LDN_LAB" for technology start-ups.
Finance minister Philip Hammond said it showed that Britain is "the best place" to grow new businesses.
London Mayor Sadiq Khan said Facebook's commitment indicated the city remained "at the forefront of global innovation", while predicting that the incubator would "pave the way for the next generation of successful start-ups".
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