Trago Mills, which runs three stores in Cornwall and Devon, was granted planning permission in 1999 but work was stalled by several issues including access and land reclamation.
Now, work officially gets under way next to Cyfarthfa Retail Park on Friday.
The development is due to be completed by spring 2018.
It will include a new store, cafe and garden centre, as well as warehouse, offices and parking.
There are also plans to develop the site further with a petrol station and leisure facilities.
The company was founded in the 1960s by Mike Robertson, father of current chairman, Bruce Robertson.
He said: "Whilst rather later than anticipated, having first acquired the former Butterley Brickworks site in the mid-90s, we're delighted to be starting work on the Merthyr store.
"Once completed, our new store will be a bold and complementary addition to the thriving retail environment already existing at Cyfarthfa."

It is currently negotiating with the landlord of an office block but has other options if those discussions are not successful.
The paper has sold its current premises on Royal Avenue to the developer McAleer and Rushe.
Its owner, INM, decided to move due to the closure of the printing operation within the Royal Avenue premises.
When it made the announcement in August, INM (Independent News & Media) said it would find new premises for the paper in the "very heart of the city".
Work is starting on a long-awaited £40m retail and leisure complex in Merthyr Tydfil, set to create 400 jobs.
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The BBC understands that the Belfast Telegraph is planning to move to Clarendon Dock.