The mining billionaire told Australian media that construction will start at the end of next year.
It would be ready to set sail in 2016.
The plan, he added, is for the vessel to be as similar as
possible to the original Titanic in design and specifications, but with
modern technology.
Mr Palmer told Australian media that he had signed a
memorandum of understanding with CSC Jinling Shipyard to construct the
ship.
"It will be every bit as luxurious as the original Titanic
but of course it will have state-of-the-art 21st Century technology and
the latest navigation and safety systems," he said in a statement.
The announcement comes just weeks after the centenary of the sinking of the ill-fated Titanic.
The vessel, the largest luxury ship in its time, struck an
iceberg on its maiden voyage from Southampton to New York. It went down
on 15 April 1912, leaving more than 1,500 people dead.
"Of course it will sink if you put a hole in it,'' Mr Palmer
said in response to questions from reporters on whether the Titanic
replica would sink.
The new vessel is scheduled to sail from London to New York in late 2016, if all goes as planned.
"It is going to be designed so it won't sink,'' he added.
''But, of course, if you are superstitious like you are, you never know
what could happen.''
The cost of the construction is not known, a spokesman for Mr Palmer told Australian media.
The mining magnate from Queensland, who has strong business
relations with China, has expanded into tourism. He owns a luxury resort
on the Sunshine Coast and has plans to build a fleet of luxury liners.
His plan to build the Titanic replica was announced on the
same day that he revealed plans, in a separate news conference, to
contest the next federal election in Queensland.
He told reporters that he has expressed interest in standing
for Queensland's Liberal National Party (LNP), part of the conservative
opposition at federal level, in the Brisbane seat of Lilley - currently
held by Deputy Prime Minister and Treasurer Wayne Swan.
Source: BBC News