The synagogue will be part of the multi-faith "Abrahamic Family House" complex in Abu Dhabi, which will also feature a mosque and church of which full construction will be completed in 2022, Abu Dhabi newspaper the National reported on Sunday.
The complex was announced in February following a visit by Pope Francis to the UAE, the first by a pontiff to the Arabian Peninsula.
Muslim UAE promotes itself as a center of tolerance and says it supports religious freedom and cultural diversity. However, the government does not allow dissent against its leadership and is criticized by human rights groups for jailing activists.
Though the synagogue will be the first in the UAE, a small Jewish community of expatriates currently use a house in Dubai for private worship.
Other official non-Muslim places of worship in the country include Christian churches, a Hindu temple and a Sikh Gurdwara.
The majority of those in living in the UAE are foreign workers, the largest group of which are Indians. The Indian Embassy in Abu Dhabi said about 2.6 million Indians live in the UAE, or about 30% of the population.The UAE does not have diplomatic relations with Israel, though Israeli politicians have visited the country to attend international events.