Jetstar will introduce the new domestic jet route from October, its sixth domestic jet route in New Zealand.
The service will operate on a Wednesday, Friday and Sunday, arriving in Dunedin at 12.25pm and departing for Wellington at 12.55pm.
Jetstar would also add a wide body Boeing 787 aircraft to its transtasman schedule over the Christmas holiday season, and increase seats to Queenstown and Christchurch from Australia during summer.
Dunedin Airport chief executive Richard Roberts said the service was ''great news for the city and the region, as it provides more capacity and greater connectivity within New Zealand''.
Mr Roberts said the introduction of the service illustrated Jetstar's confidence in Dunedin's market, and the potential for growth.
The new service meant more than 50,000 extra seats in and out of the region annually.
Marketing and communication manager Megan Crawford said the airport had been developing relationships with airlines, including Jetstar, making sure they understood the opportunities in the New Zealand market.
''From those partnerships and relationships, these opportunities arise.''
Enterprise Dunedin director John Christie said the additional connectivity would bring choices for business and government department travellers, as well as visitors.
Dunedin South MP Clare Curran said she was pleased Jetstar realised Dunedin was a viable route, and would bring more opportunities for commerce and economic activity between the two main centres.
Jetstar New Zealand head Grant Kerr said additional Airbus A320 capacity from Australia to Queenstown would mean more than 10,000 extra seats between December and January compared with last year.
''Queenstown is truly a year-round holiday destination, and we're recognising that by adding a significant number of extra seats this summer.
The new routes to and from Dunedin add to those announced recently by new entrant to the regional airline industry, Kiwi Regional Air.
The airline said last month return flights from Dunedin to Queenstown will begin on September 27.
