The 400-member Santee Sioux tribe already runs a casino, hotel and ranch and hopes the resort will be a new revenue generator.
Marijuana is not legal in South Dakota but the tribe has been permitted to grow and sell pot since June.
It will open on New Year's Eve and only be sold on the reservation.
Sioux leaders would grow the marijuana to be offered in a smoking lounge.
The lounge would have games, food and a bar, and eventually slot machines and a music venue.
"We want it to be an adult playground," tribal president Anthony Reider told the AP news agency.
"There's nowhere else in America that has something like this."
Tribe leaders predict the resort would make up to $2m (Â£1.3m) per month.
Marijuana is growing at a facility on the reservation now and they hope to sell it for the first time on 31 December at a New Year's Eve party.
The Justice Department put out a new policy allowing Native American tribes to grow and sell marijuana in a similar way to some US states like Colorado in 2014.
The strict provision does not allow tribes to sell marijuana to minors or grow it on public land.
Marijuana will be sold in sealed one-gram packages for $12.50 (Â£8.27) to $15, and people will only be able to buy one gram at a time.
"[The tribe] must look at these opportunities because in order to preserve the past we do have to advance in the present," said Mr Reider.

Officers were called to Derby Road, Enfield at 15:30 GMT on Saturday after reports of a gun being seen in a car.
A Metropolitan Police spokesman said the reported car was stopped at 16:00 GMT and the four men inside were arrested.
They are currently being held at a north London police station.

The South American country will be the first in the world to legally sell the drug over the counter for recreational use.
The move was set in motion in 2013 with a law that fully legalised the cannabis trade.
However, it has been a slow process to put the law into practice.
"Cannabis will be dispensed in pharmacies starting in the month of July," presidential aide Juan Andres Roballo told a press conference.
The law requires buyers to sign up to a national registry, which Mr Roballo said would be up and running by 2 May. The price will be US$1.30 (Â£1) per gram.
Registrants - who must be Uruguayan citizens or permanent residents - can purchase up to a maximum of 40 grams (1.4 ounces) per month.
The marijuana sold will come from state-supervised fields.
The law also allows users to grow their own at home, or join  cooperative clubs that farm it.
Many pharmacists have doubted the financial benefits of selling a cost-controlled product.
Some Uruguayan buyers were also reluctant to sign up to a national registry, complaining of the invasion of their privacy and of having to keep to the monthly limits.
The government has now done a deal with 16 pharmacies, but it hopes to sign up more.
Mr Roballo said there would be a public health campaign before the registry was opened.
He also said the government was not close to covering the predicted demand, but it does not believe there will be "an avalanche of users" signing up,

Shares in Barclays fell 0.9% after the US Department of Justice sued the bank for alleged mortgage securities fraud.
It says Barclays misled investors about the quality of loans backing securities in the run-up to the financial crisis. Barclays has rejected the claims
Data showed the UK economy grew faster than estimated in the third quarter.
The Office for National Statistics (ONS) said the economy grew by 0.6% in the July-to-September quarter, compared with the previous estimate of 0.5%.
However, the ONS also trimmed its growth estimates for the first and second quarters of the year.
On the currency markets, the pound fell 0.2% against the dollar to $1.2258, and slid 0.4% against the euro to â‚¬1.1725.
A Native American tribe in the US state of South Dakota has said it plans to open what would be the first marijuana resort in the US.
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Four men were arrested in north London when police found a gun, a sword and a knife in the car they were travelling in.
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Uruguay will begin selling cannabis in pharmacies from July, the final stage in the country's pioneering regularisation of the drug.
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UK shares edged higher in the final trading session before Christmas, with the FTSE 100 ending a shortened session up 4.49 points at 7,068.17.