France has won a A$50bn (€34bn; £27bn) contract to build 12 submarines for the Australian Navy, beating bids from Japan and Germany, reports the BBC.
The deal, announced by prime minister Malcolm Turnbull, is Australia's largest-ever defence contract.
The Shortfin Barracuda submarines will be built in Adelaide using Australian steel, creating 2,800 jobs, he said.
Japan, which had been a frontrunner in the contest, said the decision was "deeply regrettable".
Defence minister Gen Nakatani said Japan would "ask Australia to explain why they didn't pick our design".
Mr Turnbull said the decision, the result of a 15-month bidding process, was "securing the future of Australia's navy over decades to come".
"Australian workers will be building Australian submarines with Australian steel."