Ground has broken on the empty lot at 45 S. Columbia St.
The store will employ six to 10 people, said Angela Petkovic with Dollar General public relations.
Founded in 1939, the Dollar General corporation has grown to include more than 17,000 locations in 46 states.
The closest existing Dollar General is about four hours away in Madras.
Dollar General stores sell food, snacks, health and beauty aids, cleaning supplies, basic apparel, housewares, seasonal items and paper products from major brands, as well as several private labels.
Contractor Don Jackson Excavation LLC is preparing the Milton-Freewater site for Collaborative Construction Solutions, based in Battle Ground, Washington.