The company has made the move to develop its own production base as the United Kingdom increasingly faces a squeeze on studio space as TV companies, film studios and the streaming giants pour billions into making content. The two studios will be walking distance from each other.
Once complete, the initial site will include production offices, a set construction workshop, a screening cinema and modern post-production and digital facilities. It will also have capacity to host productions from third-party producers.
Sky Studios Elstree will become the European production base for Sky and NBCUniversal, which owns Fast and the Furious maker Universal Studios, as both are owned by USA pay-TV giant Comcast.
Sky predicted up to £3bn would be invested in new production at the site over the next five years.
Subject to planning consent the studios are expected to open in 2022 and will be able to facilitate the production of several films and TV shows simultaneously.
Sky Studios chief executive Gary Davies said the decision to build the studios was driven by customers' hunger for high quality original content.
Roger Morris, managing director of Elstree Studios, added: 'Sky Studios Elstree will be of enormous importance to the United Kingdom film and television industry - it will not only boost the local economy of Hertsmere and Hertfordshire, but will also have a major impact on the UK's creative sector as a whole. Legal & General is in the process of finalizing a design and formal planning applications will be made in early 2020.
Elstree Studios managing director Roger Morris added: "Sky Studios Elstree will be of vast importance to the UK Film and Television industry - it will not only boost the local economy of Hertsmere and Hertfordshire, but will also have a major impact on the UK's creative sector as a whole".