The Brazilian Government has given the formal go-ahead for the construction of what will be the world's third biggest hydro electric dam.
After several failed legal challenges by environmentalists, President Lula da Silva signed the contract for the building of the Belo Monte dam in the Amazon river basin.
When the dam starts operating in 2015 it will generate enough power to supply 23 million homes in Brazil.
The Brazilian Government says the project will create 20,000 jobs.
But the dam will flood almost 500 square km of virgin Amazon rainforest.
Environmental campaigners, including Hollywood film director James Cameron have warned that up to 50,000 indigenous people will lose their homes.
Officials say those people will get compensation but campaigners argue the likely damage to wildlife can not be repaired.