The deal comes as a lifeline to the shipyard, which had failed to secure any major orders for nearly two years.
French Prime Minister Jean-Marc Ayrault, a former deputy for the Atlantic coast region, hailed the news praising "the excellence of French know-how in naval construction".
Miami-based Royal Caribbean International said it was ordering a sister ship to its two top-of-the-line cruise liners, the Oasis of the Seas and Allure of the Seas, with an option on a second vessel.
"This contract exceeds 1 billion euros representing over 10 million hours' work over three years for the Atlantic shipyards and their sub-contractors," said French Finance Minister Pierre Moscovici in a joint statement with Foreign Trade Minister Nicole Bricq.
"We are very satisfied," STX France chief executive Laurent Castaing told France's I-Tele. "The competition with Finland was fierce."
The company's two other Oasis-class liners, built in Turku, Finland, cost €900 million ($1.2 billion) each according to the trade press. They were delivered in 2009 and 2010.
For the French shipyard it is a welcome boost after four years blighted by the financial crisis.
The SXT France yard employs 2,100 people, supporting another 4,000 sub-contractors.
Studies will start in January 2013 while construction is planned to start in September.
"We are extremely proud to have been selected by Royal Caribbean International to build this third unit," STX France managing director Laurent Castaing said in a statement.
"The ship is a real exception in the cruise world as it is highly innovative and spectacular."
Royal Caribbean said its capital spending would be $1.3 billion for 2012; $700 million in 2013; $1.2 billion in 2014 and in 2015; and $1.3 billion in 2016.
The two existing Oasis-class liners are the largest cruise ships in the world, boasting 16 decks and each able to carry 5,400 passengers.
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They have a range of facilities including a swimming pool with a wave machine, rock climbing walls a full-size basketball court and an ice skating rink. Both ships are based in Florida.
STX France is two-thirds owned by STX Europe, which is a subsidiary of South Korea's STX Shipbuilding. The other one third of STX France is owned by the French state.
Earlier this month, Moscovici had promised to save the Atlantic shipyards by bringing in new contracts.
The Saint Nazaire shipyard built the transatlantic liners Normandie in 1935 and France in 1960 and the Queen Mary 2 in 2002.