The project is due to be installed approximately 12km northwest of Hiiumaa island, west of Estonia.
The 700-1,100MW project will comprise 100-160 turbines, between 4MW and 7MW, the developer said. It is currently expected to be online in 2020.
"Both Estonia and the Hiiumaa economy has a lot to win here, and the newly signed cooperation agreement puts this giant victory for the region into numbers and concrete actions," said Nelja Energia chairman Martin Kruusi.
The mayor of Hiiu, Reil Rand, said: "It is very gratifying that one energy company sees its normal business and the opportunity to redeem a community."
Nelja Energia, also known as 4energia, is also behind a 400-800MW offshore wind plan in the Baltic Sea off Lithuania.