The discount retailer is building a 524,000sq ft site next to their offices on Normanton Industrial Estate.
And the centre will create 300 new jobs during the next three years.
It is part of Poundworld’s expansion plans, which will see 200 new stores open around the country in the same period, creating more than 4,000 jobs.
The warehouse is expected to open by autumn 2016 and will distribute products to more than 280 stores across the country.
Poundworld founder Chris Edwards said: “It is a very exciting time with a number of significant developments including our new distribution centre, an ambitious store opening plan and not to mention our own BBC One prime time series Pound Shop Wars.
“We are delighted that the centre will allow us to create 300 jobs, giving a much needed boost to the economy.
“Our centre in Normanton is ideally placed in the city and we hope that our investment in Wakefield will help to create a place where people want to work, invest, live and visit.”
Mr Edwards started the company on a Wakefield market stall in 1974 and his family opened their first high street store in 2004.
The retailer now has more than 280 outlets selling items for £1, as well as 50 Bargain Buys shops.