'Real Madrid Resort Island' is a $1 billion dollar venture with the RAK Marjan Island Football Investment Fund and the government of the Emirate of Ras Al Khaimah, developed under the club's brand.
No further financial details were given.
A presentation at the Bernabeu on Thursday showed plans for sports facilities, a marina, luxury hotels and villas, an amusement park, a club museum and a 10,000-seat stadium with one side open to the sea.
"It is a decisive and strategic step that will strengthen our institution in the Middle East and Asia," said Real president Florentino Perez.
The 430,000-square metre leisure facility is expected to attract around one million visitors in 2015.
Real said the artificial island's location put it equidistant between Europe and the Far East, adding that more than half of their estimated 300 million followers were based in Asia.