The film, set to star Michael Fassbender as loose cannon Oslo detective Harry Hole, will start filming in January 2016.
“I can tell you that the production of Snowman will be in Oslo. I have known this for a while, but I did not want to announce it without the approval of the production company,” Oslo's culture councillor Hallstein Bjercke told Norway's NRK broadcaster.
The news comes as relief to Norwegians, who had feared that Nesbø's detective might become a native of Sweden's capital Stockholm, after a bidding war broke out between the two Scandinavian cities.
In the ten Nesbø novels in which he features, Harry Hole is an Oslo native.
The film will be directed by Swedish director Tomas Alfredson, who has previously directed “Let the Right One In” and “Tinker Tailor Soldier Spy”.
Bjercke made the announcement on his last day as culture councillor before stepping down to make way for the new red-green city council.
“I was hoping to get to this before I resigned as culture councilor, this is of course, very nice. Snowman is the first major project we have had in Oslo. It's a huge production, and a feather in the cap for everyone who worked on this,” he said.