Corrections Minister Sam Lotu-liga has turned the first sod on the site where the $300 million maximum security Auckland Prison will be built.
It will hold 260 of the country's most dangerous prisoners from the northern region, including those with serious mental health problems.
Mr Lotu-liga said the facility would provide a safer environment for staff, visitors and prisoners.
He said the prison, which is expected to be operating by mid-2018, would save the taxpayer about $175 million in the next 25 years.