The R&D facility would come up in the 100-acres, and will employ 500 researchers.
The facility would carry out research in areas such as water, building material, personal care, paints and coatings, plastic chemicals besides carrying out basic research in chemistry and chemical engineering.
The MoU was signed by Dow Chemical International's India chief executive officer Vipul Shah, and Maharashtra government's Industry secretary V K Jairath on Wednesday.
Chief Minister Vilasrao Deshmukh and company's international executive president Michael Gambrell were present in the occasion.