The New York Times reported that the museum is to be designed by Los Angeles architect Frank Gehry and will be located in the cultural district of Abu Dhabi, the capital of the United Arab Emirates.
The museum, to be called the Guggenheim Abu Dhabi, will exhibit modern and contemporary art. Government officials are hoping the museum will serve as a linchpin for the sprawling new cultural district, the newspaper said.
The museum would be the largest of the Guggenheim's outposts, 25 percent bigger than the Guggenheim Bilbao in Spain, which Gehry also designed.
"This is an extraordinary opportunity for the Guggenheim to become involved in the Middle East," said Thomas Krens, director of the Guggenheim Foundation. "Our challenge now is to define the next generation of Guggenheim museums."
The Guggenheim Abu Dhabi is expected to be completed by 2011.